City warns Burnham against capital gains tax increase
Senior financiers and business leaders are warning UK Prime Minister Andy Burnham that increasing the capital gains tax (CGT) could harm economic growth and discourage investment. The proposed rise from 24% to as high as 45%, outlined in a Budget submission by Labour donor Dale Vince, has drawn criticism for potentially penalizing entrepreneurs and investors. Matt Benchener of Hargreaves Lansdown argues that the policy would reduce incentives for risk-taking due to already uncertain returns on investment. The plan is claimed to raise £14bn annually, with funds used to increase personal tax allowances and provide support for low earners. However, critics like Benchener question these revenue estimates, citing HMRC data suggesting a 10 percentage point CGT rise could cost the Treasury £3.5bn per year instead of adding to it. Other business leaders warn that increasing CGT may lead investors to sell UK assets before new rules take effect and contribute to an ongoing wealth exodus from Britain.
Topics: capital gains tax economic impact government budget proposals tax policy reform