Andy Burnham is being pushed to drive our taxes to new highs. He’ll be worse than Rachel Reeves, writes Harvey Jones.
Andy Burnham’s capital gains tax plan would backfire horribly, writes Harvey Jones. (Image: Getty)
There is a lot of speculation about which taxes Andy Burnham might increase if he becomes PM, but one keeps popping up again and again: capital gains tax. Often described as the forgotten tax, CGT is charged on profits made when selling assets such as investment properties, second homes, shares held outside tax-free ISAs, antiques, bitcoin and businesses. If you think that won’t hit you, you might just be wrong.
CGT has become far more punitive, with the annual tax-free exempt amount slashed by the Tories from £12,300 to just £3,000. Chancellor Rachel Reeves also hiked CGT rates in her first Budget. It is now charged at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. That’s nothing compared to what’s coming our way next. A host of Labour figures, from Wes Streeting to Burnham adviser Louise Haigh, want to go an awful lot further than that.
Basically, there’s no end to Labour’s avarice. In the 2025/26 tax year, CGT receipts hit a record £22.2billion. That’s a massive increase of 62% from £13.7 billion the previous year. The Office for Budget Responsibility is even predicting CGT receipts could reach £27.3 billion in 2029/30. But even that growing haul is still nowhere near enough for Labour. Now it wants to go ballistic.
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Louise Haigh, the former Transport Secretary who resigned from Keir Starmer’s cabinet over a fraud conviction but is now back in Burnham’s favour, is pushing for more. She wants rates aligned with income tax, so people could pay 20%, 40% or 45%, depending on their tax bracket. She has also backed another reform: scrapping the CGT uplift at death.
Gary Smith, partner in financial planning at wealth management firm Evelyn Partners, said this would be a political hot potato. “It could hit people across the whole wealth spectrum, and not just the wealthy,” he said.
Under current rules, when someone dies, their assets receive an uplift in market value to the date of death. This means beneficiaries can sell them without paying CGT on gains made before death. Under Haigh’s proposal, that uplift would disappear. Smith gave the example of an asset bought for £100,000 and worth £200,000 when the owner dies.
Today, there would be no CGT bill at death. In future, beneficiaries could face tax on the £97,000 gain after the £3,000 limit. “That’s a tax bill of £17,460 or £23,280. Of course, this would be even higher if CGT rates were raised further or even equalised with income tax,” he said.
There could also be an inheritance tax bill on top, creating a double death tax. The impact could be even greater for business owners. Someone who built a company worth £5million could face a tax bill running into millions when passing it on.
Even some supporters of aligning CGT rates with income tax have raised concerns. Dan Neidle, founder of Tax Policy Associates think tank, has warned that CGT currently applies to “purely inflationary paper gains”, rather than genuine gains after inflation. That needs to be changed if any major reforms are made.
There has also been talk of Labour introducing an “exit tax” to stop entrepreneurs leaving Britain to avoid higher charges. That could be the perfect way to discourage people from ever building businesses here in the first place. If Burnham fiddles with the forgotten tax, millions may never forgive him. We’ll all suffer, and not just the wealthy.