UK
Chancellor Rachel Reeves refuses to rule out inheritance and capital gains tax rises
The chancellor has refused to rule out inheritance and capital gains tax rises after Sir Keir Starmer warned the autumn budget will be “painful”.
Rachel Reeves would not answer “yes” or “no” three times when asked on Wednesday if she could specifically rule out raising the two taxes at the budget this October.
The previous day, Sir Keir Starmer said the October budget is “going to be painful” in his biggest hint yet taxes will rise.
Labour repeatedly said during the election campaign, and since, they would not increase income tax, national insurance and VAT but avoided answering whether other taxes would rise.
Inheritance tax, charged on the estate of someone who has died, and capital gains tax, imposed on the profit from the sale of capital assets, have been touted as the two most likely to see a rise.
Asked on Wednesday if she would be increasing both taxes, Ms Reeves said: “I’m not going to write a budget two months ahead of delivering it.
“We’re going to have to make difficult decisions in a range of areas.”
Asked again if she could rule out increasing them, she said: “On spending, on welfare, and tax, we’re going to have to make a series of difficult decisions, but I’ll set out that detail in the right and proper way on the 30 October at that budget.”
And given a third opportunity to rule out those rises, she said: “I’ll set out the budget on 30 October.”
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PM: Budget will be ‘painful’
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Which tax rises could Labour introduce?
Many in the City have expressed concern about the government lifting the rate of capital gains tax from a maximum 28% to be in line with the 45% higher rate of income tax.
A report from the Institute for Fiscal Studies (IFS) said equalising the two could raise £16.7bn.
But HMRC’s own analysis, as well as many economists, said increasing capital gains tax could reduce the amount taken as people are more likely to delay selling their assets.
Inheritance tax is currently paid at 40% on estates worth over £325,000 but exemptions mean only 5% of deaths are taxed, and often at a much lower rate.
The IFS said the government could raise £4bn extra by closing loopholes in inheritance tax.