Sir Keir Starmer’s senior assistant has raised new concerns that Labour would increase capital gains tax on businesses and property owners if it wins the 2024 general election.
The chief of staff to the Labour leader, Morgan McSweeney, "liked" a LinkedIn post saying raising the tax would be "politically wise”.
Some reports have suggested Mr McSweeney did this accidentally.
The post, from Labour adviser Matthew Torbitt, read: “Labour would be wise politically to raise capital gains tax, it is an easy sell to the 3 in 100 that currently pay it — we have to ask ourselves what sort of society we want to live in. A small rise would bring in over £15bn — lifting the two-child cap would cost £1.6bn. Sounds a good idea to me!”
Mr McSweeney has since removed the like.Labour has been accused of planning 17 “secret” tax increases, including increasing capital gains tax for companies.
The Chief Secretary to the Treasury Laura Trott said: “Labour think they can hide these secret tax rises until after the election, but we won’t let them get away with it.
“Keir Starmer should come clean with the British people.”
But what is capital gains tax and could we see it increase after the election?
What is capital gains tax?
Capital gains tax: A tax on the profit you make when you sell (or 'dispose of') an asset that's increased in value. The gain you make is taxed, not the total amount you receive. You can earn an annual allowance without paying CGT, and the tax rate depends on your income tax band.
Personal allowance: A tax-free amount you can earn in the UK before income tax applies. It's essentially the portion of your income necessary for basic living expenses.
Capital gains tax breakdown:
- Annual allowance: For the 2024/25 tax year, you get a tax-free allowance of £3,000 on capital gains.
- Tax rates:
Personal allowance details:
- Standard allowance: £12,570 for the 2024/25 tax year. You don't pay any income tax on the first £12,570 you earn.
- Can be higher: You may be eligible for a larger personal allowance if you claim additional benefits such as Marriage Allowance or Blind Person's Allowance.
- Can be lower: If your income is over £100,000, your allowance is gradually reduced until it disappears at £125,140 or more.
- Applies in Scotland: In Scotland, there’s a separate system for income tax rates and bands. However, the concept of a personal allowance remains the same.
Some assets are exempt from CGT, including your main residence (with certain conditions); personal belongings sold for less than £6,000 (excluding cars); ISAs or PEPs; UK Government gilts; premium bonds; and winnings from betting, lotteries, or pools.
For more information on capital gains tax, visit https://www.gov.uk/capital-gains-tax.
Visit https://www.gov.uk/income-tax-rates for more information on income tax rates and personal allowances:
Will capital gains tax go up after the election?
The Guardian reported that Mr Starmer had ruled out imposing capital gains tax on the sale of people’s homes. He said it was “desperate” tactics from the Tories to suggest he would.
Labour has consistently stated that, other than the targeted raids on non-doms and private schools previously revealed, it has no plans to increase taxes.
It has ruled out increasing the rates of income tax, VAT and national insurance.
However, Labour frontbencher Jonathan Ashworth on June 10 refused to rule out raising capital gains tax or corporation tax if his party wins the election.
As such, some commentators are not convinced Labour is being truthful about its pledges.
The Conservatives are adamant that if Sir Keir takes over at No. 10, he will likely announce significant tax increases.
