Chancellor Rachel Reeves is poised to unleash a major tax shakeup that could see millions of homeowners and property investors hit with a massive bill, The Independent can reveal.
Treasury officials are actively considering plans to align the rates of Capital Gains Tax (CGT) with income tax, a move that would represent the single biggest raid on assets in decades and mark a stark departure from previous Labour policy.
The End of the CGT Discount?
Currently, higher-rate taxpayers pay a generous 24% rate of CGT on gains from residential property, starkly lower than the 40% top rate of income tax. The radical proposal on the table would effectively abolish this discount, forcing landlords and second homeowners to hand over a far larger chunk of their profits to the exchequer.
This policy reversal is particularly explosive given Labour's 2019 manifesto explicitly promised "no increases in the rate of Capital Gains Tax." While the party has since ditched that pledge, the move is already being branded a "devastating blow to aspiration" by critics.
Who Would Be Affected?
The Treasury's target is not the average family selling their main residence, which remains exempt from CGT. Instead, the policy is squarely aimed at:
- Individuals selling second homes or holiday lets.
- Landlords cashing in on buy-to-let properties.
- Investors with significant asset portfolios outside of tax-free wrappers like ISAs.
The potential revenue boost for Treasury coffers is significant, but the political fallout could be immense, threatening to alienate a core segment of voters.
A Brewing Political Storm
The mere suggestion of the policy has already ignited a firestorm in Westminster. Conservative MPs have been quick to condemn it as a "tax on aspiration" that would punish those who have invested for their future.
All eyes are now on Reeves' first major fiscal event, expected this autumn. Will the new Chancellor follow through with this aggressive move to fill the nation's coffers, or will the threat of a fierce political battle force a strategic retreat? The decision will define her chancellorship and set the tone for Labour's economic approach.
