Reeves refuses to rule out capital gains tax rise

Chancellor Rachel Reeves has refused to rule out whether she will increase the rate of capital gains tax in her autumn Budget.

The levy is charged on profits made from the sale of an asset that has increased in value, such as second homes or shares not held in individual savings accounts (ISAs).

During a visit to the US, Ms Reeves said it was important to "strike the right balance" when deciding on tax policies.

The chancellor has previously warned the government "will have to increase taxes" due to an apparent £22bn "hole" in the public finances, but has not specified which ones yet.

Asked whether she was considering increasing capital gains tax during an interview with Bloomberg in the US, the chancellor replied: "We've got a budget on October 30 and we will set out our policy then, but it's always important when you're deciding tax policy to strike the right balance.

"Of course you need to bring in the revenue to fund vital public services, but we've also got to grow the economy. I won't do anything that makes it harder to achieve that economic growth and prosperity."

Ms Reeves is currently in New York where she is courting global investors as part of the government's strategy to boost economic growth in the UK.

She has ruled out raising VAT (value added tax), income tax or National Insurance at her Budget, which has led to growing speculation over which taxes she will increase, with a hike in capital gains tax among the possible options.

Capital gains tax is payable by individuals, but also self-employed sole traders, partners in business partnerships and company owners, among others.

Critics point out that the current rates are substantially lower than income tax rates and tend to benefit wealthier people.

For higher earners, capital gains tax, external is currently 28% on gains from residential property or 20% on gains from other assets.

Meanwhile, income between £50,271 and £150,000 is taxed at 40%, while the top rate of tax for the highest earners is 45%.

However, business groups have warned increasing the levy could impact entrepreneurs selling a small business and stunt economic growth.

Last year, Ms Reeves told the BBC: "I don't have any plans to increase capital gains tax."

During the general election campaign, Prime Minister Sir Keir Starmer ruled out raising capital gains tax on the sale of primary residencies.

Labour has repeatedly said it would not raise taxes for "working people", but the Conservatives argue the opposite.

Ms Reeves' three-day charm offensive in the US and Canada comes ahead of the International Investment Summit, due to be hosted by the prime minister on 14 October, which is seen by ministers as a way of demonstrating that the UK "is back on the world stage".

Asked about a potential US-UK trade deal, and whether that would be more likely to happen under Kamala Harris or Donald Trump, Ms Reeves told Bloomberg: "It's up to the people of the United States to choose who they want as their president.

"But the UK government - whether that's Labour or a Conservative government in the UK - has always worked with whoever's in the White House and whoever is in Congress, and that'll continue to happen."