Capital gains tax rate could be moved to 45 percent in huge increase: ‘Very possible’
Laura Kuenssberg grills Rishi Sunak on taxation rise
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Prime Minister Boris Johnson’s plan to raise taxes via National Insurance has won the support of Parliament as only 10 Tory MPs rebelled against the proposal. The 1.25 percentage point national insurance hike for workers and employers was announced last week by the Prime Minister. Steve Barclay, the Chief Secretary to the Treasury, insisted that the tax would raise money in a “responsible and fair way” and said it would tackle the NHS backlog. He added it would put adult social care “on a sustainable long-term footing, and end the situation in which those who need help in their old age risk losing everything to pay for it”.
But one of the Tory rebels, John Baron, urged ministers not to “raise taxes on jobs ineffectively, and risk choking off an economic recovery”.
Figures from the Labour Party, including Mayor of Greater Manchester Andy Burnham, have suggested wealth taxes could instead be uses to raise funds.
Labour leader Keir Starmer himself mentioned capital gains tax while talking to Sky News’ Beth Rigby last week.
This comes amid reports the Government could align capital gains tax with income tax.
But analyst at AJ Bell, Tom Selby, told Express.co.uk that this could mean people paying as much as 45 percent on the levy.
He added it is “very possible” capital gains tax will be aligned with income tax.
Mr Selby said: “The Office for Tax Simplification’s proposals edged towards aligning the two taxes.
“The impact of that would be someone disposing of an asset would pay significantly more tax than they do at the moment.
“There would be a big impact on landlords for example, people who have second properties.
“At the moment, capital gains tax is charged at 10 percent or 20 percent depending on whether you are a lower rate or higher rate taxpayer.
“If this was aligned with income tax, you would be looking at a tax rate of 20 percent, 40 percent or even 45 percent.
“So if you went down that route, anyone with significant assets or multiple properties could see a big impact on the value of their property.”
Capital gains tax payers in the lower rate band currently pay 18 percent on residential property and 10 percent on other assets.
In the higher rate band, they pay 28 percent on property and 20 percent on other assets.
Health Secretary Sajid Javid said earlier this week that public spending needs to be cut before any more taxes are increased.
During an interview on Sky News, Mr Javid made clear his opposition to any further tax increases this Parliament when asked if he would promise to stand against such a move.
“If we have to spend more somewhere else, I think that we should always be trying first to see where we can make savings to pay for that, not extra tax rises,” Mr Javid said.
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“Tax rates should always be the last resort. It’s been right to do it on this occasion, but we should always try to avoid it.”
Many Tory MPs fear that recent tax hikes could help Labour.
Last week, the Tories slumped in the polls by five points while Sir Keir’s Labour took a lead.
Backing for the Tory Party fell five points to 33 percent while Labour share increased by one point to 35 percent, according to the latest YouGov survey.
It put Sir Keir Starmer’s party ahead for the first time since January. It marks a remarkable turnaround for Labour over the summer, having been 18 points behind the Tories in a YouGov survey in May.
YouGov’s Anthony Wells said: “We should be cautious of leaping to too many conclusions from a single poll, but it looks as if the government may have sacrificed their reputation for low taxes amongst Tory voters without actually getting much credit for helping the NHS.”
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