‘Strike the right balance’: Rachel Reeves doesn’t rule out capital gains tax hike
Rachel Reeves has refused to rule out a hike to capital gains tax, insisting it was vital to “strike the right balance” when it came to fiscal policy.
The Chancellor spoke to Bloomberg while in New York on a North American trip, including to Canada, to drum up confidence in Britain ahead of the UK’s international investment summit in October.
It comes as the first investors, the CEOs of BNY Mellon, Blackstone and CyrusOne in New York, all confirmed their attendance at the summit this autumn.
Reeves said: “We’ve got a budget on October 30 and we will set out our policy then, but it’s always important when you’re deciding tax policy to strike the right balance.
“Of course you need to bring in the revenue to fund vital public services, but we’ve also got to grow the economy.”
Capital gains tax has a top rate of 28 per cent, and speculation has abounded as to whether it could be brought in line with income tax, with a top rate of 45 per cent at the additional rate on income over £125,140.
On the question of carried interest – or tax perks for private equity fund managers who take a share in the profits of a fund – Reeves said: “If you’ve put in your own capital, if you’ve got capital at risk, I think it is right that you benefit from a more generous form of tax relief.
“But if it’s not your capital at risk, then it’s not right that you receive those tax breaks.”
She also confirmed the Labour government would “be sticking to” election commitments not to raise income tax, national insurance and VAT “for the duration of this Parliament”.
Reeves told Bloomberg: “I would like taxes on working people to be lower but I believe that you can’t make promises without being able to say where the money’s going to come from.
“But the tax burden in the UK has got too high – the tax burden in the UK is at a 70-year high.
“I want to bring that tax burden high down because I want to make Britain the best place to start and grow a business, and I want working people to keep more of their own money in their pockets, and that is what people will have with this new Labour government.”
While quizzed about a possible UK-US trade deal under a Kamala Harris or Donald Trump presidency, the Chancellor insisted the US “doesn’t have a greater friend than Great Britain”.
She added: “Well, it’s up to the people of the United States to choose who they want as their president, but the UK government – whether that’s Labour or a Conservative government – has always worked with whoever’s in the White House… and that’ll continue to happen.
“Britain’s largest trading partner is the US. Of course we want to build on that and make it easier for great British businesses to export to the US, and to make it easier for great American businesses to export to the UK… to strengthen and deepen those trade ties.