Finance officials have cautioned Andy Burnham and John Healey against increasing capital gains tax (CGT) in the forthcoming Budget, citing concerns that such a move may not achieve the intended revenue gains. Recent figures show that the government collected £198 million in CGT for August, representing an £8 million increase compared to the same month last year. However, overall collections since April have fallen short of the previous year’s levels.

Rumours persist that the upcoming Budget could include proposals to raise CGT rates as a strategy to boost Treasury income. Despite the modest increase in revenue recorded in August, capital gains tax remains a challenging revenue source due to fluctuations in asset sales and economic conditions. Analysts note that CGT receipts can be volatile and unpredictable, making it difficult for the government to rely on this tax stream to meet budget targets.

Sources close to the Treasury suggest that policymakers are weighing the potential impact of a CGT hike on investment and economic growth, with some expressing concerns that higher rates could deter capital investment or prompt taxpayers to defer sales. The warnings to Burnham and Healey come amid broader discussions over tax reform and government revenue generation ahead of the budget announcement scheduled for next month.

While the exact details of any CGT changes have not been confirmed, officials emphasise the complexity of balancing tax policy objectives with maintaining economic stability. The debate over capital gains tax underscores the broader challenges faced by the government in securing sustainable revenue streams without impeding market activity.