Reeves hints at capital gains tax raid amid scramble to plug £20bn black hole

Chancellor fails to rule out increase despite saying tax burden ‘has got too high’

Rachel Reeves has refused to rule out a capital gains tax raid on savers and investors a week after she warned of “difficult decisions” on tax in October’s Budget.
The Chancellor said the tax burden “has got too high” under the Conservatives, but left the door open to increasing the charge levied on capital gains.
Speaking in an interview with Bloomberg TV, she said: “I want to bring that tax burden down because I want to make Britain the best place to start and grow a business and I want working people to keep more of their own money in their pockets.”
Asked about capital gains tax, she declined to rule out an increase to the charge on investors.
“It is always important when you’re deciding tax policy to strike the right balance,” she said, during a trip to the US designed to drum up more interest in the UK among international investors.
Capital gains tax is expected to raise around £15bn this year, rising to £23.5bn in five years’ time, according to forecasts from the Office for Budget Responsibility.
The tax rate typically ranges from 10pc to 28pc depending on the type of investment made and the income tax bracket of the person making the capital gain.
There has been speculation that Ms Reeves could increase the rate to match income tax, meaning higher earners would pay 40pc or 45pc. The Treasury has refused to comment on any possible plans. 
The Government has promised not to raise the headline rates of income tax, national insurance or VAT, nor to raise taxes on “working people”. It has also said it would maintain the triple lock for the state pension.
However, this means other taxes are expected to go up, while the pledge on the triple lock does not cover other benefits, hence last week’s decision to axe winter fuel payments for those who do not receive pension credit.
The cut to benefits came as Ms Reeves revealed what she said is a £22bn black hole in the public finances left by the previous government, an analysis which was disputed by former chancellor Jeremy Hunt.
In a separate discussion she also raised the prospect of changing the fiscal rules, the self-imposed borrowing targets which determine how much so-called “headroom” the Government has to raise spending or cut taxes without incurring too much debt in the years to come.
Possibilities thought to be under consideration include changes to the way losses under the Bank of England’s £895bn quantitative easing scheme are counted, or tweaks to the accounting around student loans.
Ms Reeves told the Financial Times: “We’ll publish the precise details of the fiscal rules in the Budget.”
The Labour Party campaigned on a promise of fiscal prudence.
“Labour will turn the page on this economic chaos,” read its manifesto.
“Our approach is based on strong fiscal rules which will govern every single decision we make in government.”
However, the precise details of those rules were not spelled out.
The rules and the framework around them have been changed repeatedly in recent decades, from Gordon Brown’s golden rule to George Osborne’s introduction of the Office for Budget Responsibility which monitors the Government’s adherence to the targets.
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