Chancellor John Healey is expected to maintain current capital gains tax (CGT) rates in his upcoming budget on October 28, despite calls from some quarters to increase taxes on wealth. The tax, levied on profits from the sale of assets such as shares and second homes, currently stands at 18 percent for basic rate taxpayers and 24 percent for higher and additional-rate taxpayers. The government has reportedly ruled out equalising CGT rates with income tax, which reach up to 40 percent for higher earners.

Healey’s position comes amid debate over how best to address the government’s fiscal challenges while supporting fragile economic growth. Economic advisers and experts have cautioned against raising CGT, arguing that higher rates could discourage investment, savings, and entrepreneurship. Lord Jim O’Neill of Gatley, an informal adviser to Greater Manchester Mayor Andy Burnham, told MPs that increasing the tax on capital gains could undermine the cautiously positive trends seen in the UK economy and called for careful consideration of any tax changes affecting business confidence.

Stuart Adam, senior economist at the Institute for Fiscal Studies, highlighted the potential downsides of a CGT rise, suggesting that the government consider reforming the tax system in ways that generate more revenue without harming economic activity. He noted that ending the current exemption from CGT on assets passed at death could be one such approach, as it would reduce incentives to hold onto assets indefinitely. Similarly, Anna Valero, a former adviser to Labour’s Rachel Reeves, urged caution in imposing additional costs on businesses at a time when investment and confidence are beginning to recover.

Despite these reservations, the centre-left Institute for Public Policy Research has urged Healey to pursue a package of tax rises to raise an additional £16 billion. Their proposals include raising CGT rates to parity with income tax while introducing a “super exemption” for start-ups, a temporary windfall tax on commercial banks, and a levy on online retail sales to subsidise business rate cuts. The think tank argues that the revenue could help fund measures to ease household energy costs and relieve pressure on renters.

Conversely, the Confederation of British Industry has warned against increasing taxes on the financial sector or businesses more broadly. CBI Chief Executive Rain Newton-Smith emphasized the importance of providing relief to firms facing high energy, employment, and tax expenses, recommending measures such as raising the national insurance threshold and removing policy costs from electricity bills for non-domestic users. The CBI argues that supporting businesses is essential to fostering investment, expansion, and job creation.

While some speculation has centered on other possible revenue sources, including increased levies on banks, oil and gas companies, and gambling operators, government insiders suggest the Treasury is wary of raising CGT due to concerns that higher rates could lead to reduced tax receipts as taxpayers delay or avoid asset sales. A Treasury spokesperson reiterated that tax decisions remain the Chancellor’s prerogative to announce at fiscal events.