Andy Burnham is considering a £14bn capital gains tax (CGT) raid to fund a tax break for the lowest earners, according to a Budget submission from Labour donor Dale Vince. The proposal, which warns that wealth is being “taxed more lightly than work”, would see the personal tax-free allowance rise to £15,570.
Proposal to equalise CGT with income tax
The Labour government is reviewing plans to raise CGT to as high as 45 per cent, matching the top rate of income tax. Prime Minister and Chancellor John Healey are understood to be examining the idea, which is laid out in a submission from Vince, the green energy entrepreneur behind Ecotricity.
Equalising CGT with income tax would generate £14bn towards the giveaway, Mr Burnham has been told. The revenue could help fund raising the personal tax-free allowance threshold to £15,570, just below where it would have been had it not been frozen since 2021.
Vince: 'Put money into pockets of people who will spend it'
Mr Vince said governments had “spent years squeezing people at the bottom, while handing billions to the banks and allowing wealth to be taxed more lightly than work”. He argued that raising the personal allowance would give millions of people a meaningful boost, with the biggest benefit going to those on the lowest incomes.
“If Labour wants to get the economy moving, it should put money into the pockets of people who will spend it,” Vince said. “We can pay for it by making the tax system fairer – starting with capital gains and the billions we currently hand to banks in interest.”
Treasury response and next steps
He added: “Give people money and they’ll spend it on our high streets. That means more demand, more economic activity and a stronger economy. It’s time to put working people first.”
A Treasury spokesman said: “As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.” The proposal remains under review ahead of the next fiscal event.
