Wes Streeting Proposes Equalising Capital Gains Tax With Income Tax

Wes Streeting has proposed introducing a "wealth tax that works" by equalising capital gains tax with income tax. The former Health Secretary presented the plan as part of his pitch for the Labour leadership. Streeting told the BBC the change would address what he described as an unfair system that was "penalising work" and would encourage investment by offering lower rates of CGT to "genuine" entrepreneurs.

He estimated the reform could raise £12bn a year.

The proposal would set CGT rates at the three main income tax bands of 20%, 40% and 45%. A person's CGT band would be calculated by adding income and profits from assets. Streeting also proposed closing loopholes that allow people to disguise income from work as capital gains.

Lower CGT rates would still be offered to entrepreneurs who take risks building companies. The annual tax-free allowance for CGT currently stands at £3,000.

Helen Miller, director of the Institute for Fiscal Studies, said CGT is "in desperate need of reform" and noted "the devil will be in the detail" of Streeting's proposal. She warned against attempts to identify "genuine entrepreneurs" in advance for lower rates.

PKF Littlejohn's Adam Jefferies said the plan is not a wealth tax but an increase in the capital gains tax rate on non-business assets. Tax Policy Associates founder Dan Neidle described the proposal as "good" and suggested half the revenue could be used to cut the basic rate of income tax.

Chief Secretary to the Treasury Lucy Rigby told BBC Radio 4's Today programme that "we already tax wealth in this country" and that measures have been introduced to make tax as progressive and fair as possible. A report by the Centre for the Analysis of Taxation in 2024 estimated that reforming CGT could raise £14bn.