Labour could raise capital gains tax, Lisa Nandy suggests

Labour could raise capital gains tax if it inherits a struggling economy after the next election, Lisa Nandy has suggested.

The shadow levelling up secretary said the party’s policy would depend on what state the public finances are left in by the Tories.

Her remarks came despite Rachel Reeves, the shadow chancellor, warning a hike would hammer small business owners.

A spokesman for Labour has said that the party has “no plans to raise capital gains tax”.

Last week, a new rift opened up within Sir Keir Starmer’s shadow cabinet when Angela Rayner, the deputy leader, appeared to call for a rise.

She made the remarks after Rishi Sunak published a tax return that showed he paid an effective rate of 22 per cent on £5 million in earnings,

The document “reveals a Tory tax system where the PM pays a far lower tax rate than working people,” Ms Rayner said.

'High burden'

Ms Nandy was asked whether Labour planned to increase capital gains tax or was just “quite happy to bash it”.

“The tax system has got a very high burden on people across the board, particularly on working people and we are very concerned about that, we’ve said we want to see taxes on working people come down,” she told the BBC.

“What I’m not going to do is get into making announcements about Capital Gains Tax or other reforms to the system 18 months out from a General Election when we just don’t know what situation we’re going to inherit.

“We believe in fairness, that will be the principle that guides us, and for the detail I’m afraid you’ll have to wait until closer to the election when we know what the economic situation allows.”

Sir Keir dodged a question on the issue last week, telling broadcasters: “In relation to tax, obviously we will set out our position as we go into an election.”

Anti-business

But the shadow chancellor was more open in playing down the prospect of a capital gains tax rise, saying it would be an anti-business measure.

“Look, we will set out all those plans, but I don’t have any plans to raise capital gains tax,” Ms Reeves told the BBC.

“There are people who have built up their own businesses, who maybe at retirement want to sell that business.

“They may not have had huge income through their life if they’ve reinvested in their business, but this is their retirement pot of money.

“And we also have said we want Britain to be the best place to start and grow a business.”

Sir Keir is facing calls from Left-wing MPs to commit to higher levies on the rich, including aligning capital gains rates with income tax.

'Scandal'

Richard Burgon, a former shadow justice secretary, said: “It's time to put an end to the scandal of tax rates on income from wealth being lower than those people pay on their wages.”

Capital gains is the tax people have to pay on the profit they make when assets, such as second homes and shares, rise in value.

It is charged at 20pc on assets except for residential property, which attracts a higher rate of 28pc.