Keir Starmer Signals No Rise to 39% Capital Gains Tax

In a recent statement, Labour leader Keir Starmer suggested that the capital gains tax in the UK will not rise to 39%, countering speculation that has circulated in the media. This announcement comes as the government prepares for the upcoming Budget, where tax policies are expected to be a focal point.

Key Takeaways

• Keir Starmer dismisses the 39% capital gains tax figure as unrealistic.

• Current capital gains tax rates range from 20% to 28% for higher earners.

• Labour's manifesto promises no increase in key taxes for working people.

• Concerns arise over potential National Insurance increases and their implications.

Context Of The Announcement

During an investment summit in London, Starmer addressed the speculation surrounding capital gains tax, stating that the figure of 39% was "pretty wide of the mark." This comment aligns with Treasury minister James Murray's remarks, who also refuted claims of such a significant tax increase.

The current capital gains tax rates for higher earners in the UK vary between 20% and 28%, depending on the type of asset. The government is under pressure to manage a £22 billion shortfall in public finances, which has led to discussions about potential tax increases in the upcoming Budget.

Labour's Tax Commitments

Starmer reiterated Labour's commitment to not increasing taxes on working people, which includes income tax, National Insurance, and VAT. He emphasised that the party would adhere to its manifesto promises, which state:

• No increase in National Insurance, basic, higher, or additional rates of income tax, or VAT.

• A cap on corporation tax at its current rate of 25%, the lowest in the G7.

However, the shadow Treasury minister, Laura Trott, raised concerns that any increase in employer National Insurance would breach Labour's manifesto. This has sparked a debate within the party and among the public about the implications of such a move on businesses and the economy.

Economic Implications

The potential for a rise in National Insurance has been labelled by some as a "Jobs Tax," which could deter investment and employment growth. Critics argue that this could lead to lower wages, as indicated by the Office for Budget Responsibility (OBR).

Murray defended the government's position, stating that the manifesto's commitment to not increasing taxes on working people remains intact. He highlighted the £60 billion investment unveiled at the summit as a sign of confidence in the UK economy and the stability the new government aims to provide.

Conclusion

As the government approaches the Budget, the discussions surrounding capital gains tax and National Insurance are likely to intensify. With a significant financial shortfall to address, the Labour party faces the challenge of balancing fiscal responsibility with its commitments to the electorate. The outcome of these discussions will be crucial for the economic landscape in the UK moving forward.

Sources

• The Standard, London Evening Standard.