John Healey has signaled that his first budget will not include a rise in capital gains tax, according to reporting in The Guardian’s live politics coverage. The decision comes as Conservative leader Kemi Badenoch prepares to deliver a speech criticizing the government’s fiscal approach. Treasury sources cited in the report suggest the chancellor has ruled out increasing capital gains tax on second homes, shares, and other assets, reversing earlier speculation that such a move was favored by several cabinet ministers.
Capital gains tax applies to profits made from the sale of assets such as property or investments. Raising the rate has historically been seen as a way for governments to raise revenue without directly increasing income tax or national insurance. However, The Guardian’s report notes that officials were concerned wealthy individuals might leave the UK or defer asset sales if rates increased, potentially reducing expected revenue. The budget is scheduled for a week tomorrow, and markets along with opposition parties will watch for further fiscal signals.
KEY FACTS
- Healey’s budget will not raise capital gains tax, per The Guardian reporting.
- Capital gains tax would apply to second homes, shares, and other assets.
- Senior figures including Andy Burnham allies had lobbied for the increase.
- Concerns were raised that the increase could cost the government money.
- Capital gains tax was previously considered a preferred money-raising measure.
The Story
What happens next?
The chancellor is set to deliver his first budget a week from tomorrow, and analysts are watching for clues about how the government plans to fund public services and reduce debt. With capital gains tax off the table, attention may turn to other revenue-generating options, such as changes to income tax thresholds or business levies. The Conservative Party, led by Kemi Badenoch, is expected to criticize the government’s spending strategy in a speech later today.
Badenoch has warned that Healey’s budget could be worse than Rachel Reeves’ if spending is not slashed. This reflects broader political tensions as the opposition seeks to position itself against perceived fiscal irresponsibility. Meanwhile, the Treasury’s apparent reluctance to raise capital gains tax highlights concerns about economic behavior among high-net-worth individuals.
How did we get here?
Earlier this year, several senior cabinet ministers supported increasing capital gains tax, viewing it as a progressive way to address public finances. The policy gain momentum through advocacy from figures like Andy Burnock allies. However, the government’s decision to abandon the plan suggests a shift toward caution, possibly influenced by modeling around emigration and asset deferral.
Healey’s approach differs markedly from his predecessor, Rachel Reeves, whose budget policies were shaped by post-pandemic economic recovery. By ruling out capital gains tax increases, Healey may be signaling a preference for stability over radical fiscal reform. This could appeal to investors but raise questions about how the government intends to meet debt targets.
Who is affected?
Higher-rate taxpayers who sell assets such as second homes or stocks will be directly impacted by the decision to maintain current capital gains tax levels. Investors in real estate and financial instruments may find their after-tax returns unchanged, offering some certainty in an otherwise volatile economic landscape.
For the general public, the implications are less clear. While the government has avoided a potentially divisive tax hike, it must still identify ways to fund essential services. Pensioners, healthcare, and education budgets remain under scrutiny as the budget date approaches. The Opposition continues to frame the issue as one of responsible governance versus unchecked spending.
What We Know — and What We Don’t
Verified by the source:
- John Healey is the UK chancellor delivering his first budget soon.
- Capital gains tax increases have been ruled out.
- Several cabinet ministers previously supported a capital gains tax rise.
- Concern exists that increases could reduce government revenue.
- Kemi Badenoch will give a speech criticizing spending.
Still unconfirmed:
- Exact date and contents of Healey’s budget speech.
- Specific spending cuts or tax changes to replace lost revenue.
- Full text of Badenoch’s upcoming remarks.
- Whether other taxes or measures will be adjusted accordingly.
Why it matters
This story reflects ongoing debates about how the UK should balance public spending with economic growth. With capital gains tax increases off the table, the government faces pressure to find alternative funding sources, affecting everything from local councils to infrastructure projects. These choices influence voter confidence and investor sentiment alike.
Read more about fiscal policy developments in our economy and markets section, and follow the latest updates in UK politics.
What To Watch
All eyes are on Healey’s budget next week, where additional details on taxation and spending may emerge. Badenoch’s speech is also expected to shape the political narrative ahead of the fiscal event.