Labour’s changing message on raising taxes on inheritance and capital gains

Ahead of a ‘painful’ October Budget, the Government’s position on how it intends to balance the books is unclear

Sir Keir Starmer has warned that the October Budget will be “painful”, fuelling further speculation about what tax rises there will be in the Budget.
Labour has repeatedly ruled out increases to income tax, National Insurance, and VAT, but the party’s stance on capital gains tax (CGT) and inheritance tax have been less clear.
As Rachel Reeves refuses to rule out raising either tax, here are all the times since the beginning of the general election campaign that the party changed its message on inheritance tax and CGT.
Asked by journalists if he could rule out a rise in inheritance tax, the Prime Minister said: “We’ve no plans to raise inheritance tax.”
Asked if Labour would raise property taxes, including CGT, the Defence Secretary told Sky News: “None of our plans require us to look at extra tax but we, of course, have to see what the true state of the public finances is when we get to open the books.”
He added: “The ones that are most important are those that cost working people the most, those that are facing the highest tax burden now for 70 years.”
He said that Labour plans “do not require” changes to CGT.
The former shadow paymaster general said of Labour plans for CGT in government: “There is nothing in our plans that requires additional tax to be raised. Our commitments on tax are crystal clear with our triple-lock approach: no increase in National Insurance, no increase in income tax, no increase in VAT.
“And we will never play fast and loose with public finances; it puts mortgages up. And any tax commitment the Tories offer tomorrow, it will be based on savings they cannot find.”
Asked about an interview in The Telegraph in August 2023, where she said that Labour did not plan wealth taxes, including CGT rises, she said: “I haven’t changed my mind, because I’ve already said we have no plans to increase CGT.
“I do not want to increase taxes. I want taxes to be lower, I want to grow the economy so we have money for public services so that living standards improve and so we can keep the tax burden as low as possible.”
Asked about putting CGT on primary residences, he said: “It was never our policy. I’m happy to rule it out.”
A leaked recording emerged of Darren Jones, now Chief Secretary to the Treasury, suggesting that Labour is considering an inheritance tax raid to “redistribute” wealth.
He said: “We’ve had a bit of a debate [on inheritance tax] in Westminster because there were some plans to abolish it.
“We said on our side of the House we didn’t think that was the right thing to do, because there was going to be this kind of bulk coming through the system of huge amounts of inherited wealth in our country, largely off the back of housing asset values.
“And whilst we think the capital gains on primary residences is not the right answer, we do think the inheritance tax regime – even though some people say it’s unfair because they say it’s a double taxation – for the inter-generational inequality point we think it’s important that inheritance tax remains because it does allow you to get some of that value back in, to be able to redistribute across generations.
“It’s not a silver bullet, but I think it’s probably where the political consensus is going to have to be. You could say that on inheritance tax, you need to think of the inheritance tax as a way to redistribute money through.”
Asked if she was considering raising CGT in the Autumn Budget, she told Bloomberg TV: “We’ve got a budget on Oct 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. 
“I won’t do anything that makes it harder to achieve that economic growth and prosperity.”