Rachel Reeves, the Chancellor, has refused to rule out possible increases to both inheritance tax and capital gains tax ahead of the upcoming Budget on October 30th, as reported by The Telegraph.
In an interview, she hinted at “difficult decisions” the government may need to make but declined to commit to freezing the levies. This follows Labour leader Sir Keir Starmer’s warning that the Budget would be “painful,” urging the public to accept short-term hardship for future gains.
Inheritance tax currently stands at 40%, applied to estates valued over £325,000 after death, while capital gains tax is levied on the sale of assets worth more than £3,000. When asked about the possibility of raising these taxes, Reeves said that she is not going to write a Budget two months in advance. acknowledging that decisions on spending, welfare, and taxation would be revealed on Budget day.
This uncertainty comes after Labour’s election campaign saw the emergence of a recording featuring Darren Jones, now Chief Secretary to the Treasury, suggesting inheritance tax could be used to tackle “inter-generational inequality” by redistributing wealth.
Labour had pledged not to raise income tax, VAT, or National Insurance in its manifesto but has consistently avoided ruling out other tax increases. Cabinet members, including Reeves, have remained silent on whether capital gains tax might rise.
Reeves also defended her controversial move to cut winter fuel payments for nearly 10 million pensioners, citing the need to address a £22 billion shortfall in public finances caused by previous Conservative policies. She emphasised that tough choices are necessary to stabilise the economy, despite concerns about a surge in fuel poverty. Reeves said:
“The UK economy is just emerging from the recession that we entered into last year, and two quarters of positive growth is not going to reverse more than a decade of economic stagnation.”
