Chancellor Rachel Reeves will not change the capital gains tax rate on the sale of second homes in her budget amid concerns about the impact on the property market.
The Times reported that ministers decided to leave the CGT unchanged over concerns that raising it on second homes and the sale of buy-to-let properties would be costly.
In the last Budget, the Conservatives reduced the top CGT rate on property from 28% to -24%. The Office for Budget Responsibility said at the time that the cuts would raise nearly £700m from an increase in the number of property sales and resulting stamp duty revenues.
The Guardian understands that ministers are now concerned that raising interest rates again will slow property sales and cost the Treasury money.
Keir Starmer has suggested that CGT on the sale of shares and other assets, currently set at up to 20%, will be increased in the October 30 Budget. Taxes are expected to rise by several percentage points.
Figures from the Institute for Fiscal Studies show that only around 350,000 people pay tax a year, but they contribute around £15bn to tax revenue.
The Institute for Public Policy Research (IPPR) said interviews with billionaires suggested that most people would not be put off by the rise in CGT.
One of them, Julia Davis, told IPPR that “tax rates have never influenced my decisions to fund innovation or pursue opportunities,” while photobox Co-founder Graham Hobson said claims that CGT increases would discourage investment were “simply a myth”. .
“When I founded Photobox, capital gains tax was the same as income tax. That didn’t stop me from starting, growing and making a successful business,” Hobson said.
The Ministry of Finance is considering changes to inheritance tax and pension tax relief measures. Mr Reeves has laid out plans for £40bn of tax increases and spending cuts to avoid the real cuts to departments that were included in the previous government’s plans.
This week it emerged that several ministers had written to Mr Starmer opposing the department’s cuts plans.
The prime minister is also considering increasing the national insurance premiums paid by companies. The Guardian revealed earlier this month that Mr Reeves is considering introducing employer pension contributions into NI, which think tanks say could raise between £12bn and £17bn. It is said that there is.
The controversial increase in corporate NI contributions has sparked a backlash from industry groups who say it amounts to a tax on jobs, but Mr Starmer and Mr Reeves have refused to rule it out.
The Prime Minister told the BBC that while Labor was “clear in its manifesto that we will not raise taxes on working people”, it had not made any commitments about employer contributions to NI.
There is also growing speculation that Mr Reeves will raise fuel duty for the first time since 2011, when George Osborne froze it.
Education Secretary Bridget Phillipson told broadcasters on Thursday the government had to make “very difficult choices”.
