The UK government ruled out aligning capital gains tax rates with income tax rates, although a smaller increase remained possible ahead of the 28 October 2026 budget.
The UK government will not raise capital gains tax to the same level as income tax, although a smaller increase remains possible ahead of the Budget on 28 October 2026.
Finance minister John Healey faces pressure to raise tax revenue to offset higher borrowing costs and fund increased defence spending and expanded social care.
Capital gains tax is currently charged at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers, compared with income tax rates of 20% and 40%, respectively.
The government has limited options for raising revenue because of Labour Party manifesto commitments not to increase the rates of income tax, value-added tax, corporation tax or social security contributions.
Capital gains tax raised GBP 24 billion (USD 31.8 billion) in the 2025/26 tax year. However, economists have warned that higher rates could discourage asset sales or encourage people to leave the UK, potentially reducing the additional revenue collected by the Treasury.
