Chancellor John Healey has decided against raising the capital gains tax (CGT) in the upcoming budget, scheduled for 28 October, despite calls from some cabinet members to do so. Treasury insiders indicate that Healey is concerned a higher CGT could prompt wealthy taxpayers to delay selling assets or relocate them abroad, ultimately reducing tax revenue.

Capital gains tax is levied on profits made from the sale of assets that have appreciated in value, such as second homes or shares. The chancellor’s decision means that the government will likely focus on increasing tax revenues by targeting the profits of the banking sector instead.

Last month, Healey emphasized his commitment to fostering wealth creation in the UK without imposing what he described as constant penalties on business. He noted the rising costs affecting companies, including energy, regulatory burdens, planning restrictions, and labor expenses. “I want to draw the line,” Healey said, underscoring his aim to boost confidence, investment, and profit in British business as a path toward addressing broader economic challenges.

The planned tax measures on banks come in the context of strong profitability among the country’s major lenders, supported by higher interest rates. The UK’s four largest banks—HSBC, NatWest, Barclays, and Lloyds Banking Group—have together reported approximately £200 billion ($267 billion) in pre-tax profits over the last five years. This robust financial performance positions the banking sector as a key source of potential tax revenue in the chancellor’s forthcoming fiscal plans.

Healey’s approach reflects a balancing act between generating government revenue and maintaining conditions conducive to economic growth. While some cabinet colleagues, including Louise Haigh and Wes Streeting, had advocated for a CGT hike as part of broader fiscal reforms, the chancellor’s emphasis remains on encouraging investment and business confidence amid ongoing cost pressures and economic uncertainty.