Rachel Reeves is being warned that a massive hike in capital gains tax could endanger her hopes to create economic growth. The proposed rates of 39% and 33% are substantially higher than the current second home rate of 24%, prompting warnings from the Institute for Fiscal Studies that she must find an additional £25 billion in taxes to fulfill Labour's spending promises. As support for Labour dips below 30% for the first time in 30 months, these tax issues pose serious risks.
Sources close to Ms Reeves have attempted to downplay the speculation surrounding the Budget and allegations of turmoil. However, the concerns regarding capital gains tax increases come at a critical moment, presenting intense pressure for both the chancellor and Sir Keir Starmer as Labour faces dwindling support in recent polls. Persistent public unease with Labour’s tax strategies, including potential rises in national insurance contributions, further complicates their fiscal plans.
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