Chancellor Rachel Reeves could face pressure to raise Capital Gains Tax (CGT) following proposals by Louise Haigh, a close ally of Andy Burnham, to bring the charge closer to income tax rates. The move would leave savers with investments facing higher tax bills if adopted.
Proposals Aim to Redesign Tax System
In the publication Renewal, Ms Haigh argued that these changes should be part of a “fundamental redesign” of the tax system. She said that aligning the two tax rates more closely would restore confidence in the tax system, ensuring those who can structure their income are not favoured over those who earn through employment.
Ms Haigh, who previously managed Mr Burnham’s Makerfield by-election campaign and is expected to secure a senior Cabinet role, wrote: “It would shift the taxation burden away from punishing work, and towards unproductive capital accumulation, which does little to grow the everyday economy.”
Specific Loopholes Targeted
Ms Haigh also proposed bringing in inflation indexation so investors are not taxed on gains caused only by rising prices. She advocated for families to face a new capital gains tax charge on inherited estates to improve fairness between generations. “At a minimum, reforms should address specific loopholes, such as the capital gains tax uplift at death, which allows unrealised gains to escape taxation entirely,” she added.
Other Tax and Spending Reforms
Additional proposals included replacing stamp duty with a new annual national property and land tax, while reducing council tax for certain homes. Ms Haigh also urged the Government to relax its fiscal rules, allowing the £27.8 billion National Wealth Fund to borrow against its existing balance sheet. This could reduce pressure on the Chancellor while increasing investment in clean energy, advanced manufacturing, and key infrastructure projects. Her proposals could also shift more control over public spending from the Treasury to Downing Street.
The proposals, released last month, have resurfaced ahead of Mr Burnham’s first major policy announcement since Sir Keir Starmer's resignation as Prime Minister.
