Shadow Chancellor Rachel Reeves is facing criticism after it emerged she benefited from a £500,000 tax-free investment payout, despite Labour's vocal stance on closing tax loopholes for the wealthy.
The Labour MP received the substantial sum from a fund she invested in 13 years ago, structured in a way that legally avoids income tax under UK rules. The revelation comes as Labour positions itself as the party of fiscal responsibility ahead of the next general election.
Investment Details Spark Debate
Reeves invested £5,000 in the ArchOver fund in 2010, which later converted to a bond structure. This technical change meant her eventual payout was classified as a capital gain rather than income, allowing her to avoid income tax and national insurance contributions.
While completely legal, the arrangement appears at odds with Labour's public criticism of tax avoidance schemes used by high earners. A party spokesperson defended Reeves, stating: "All taxes were paid in full accordance with HMRC rules."
Political Fallout
The timing proves awkward for Labour as they prepare their election manifesto, which is expected to include measures targeting tax avoidance. Conservative MPs have seized on the revelation, with one Treasury minister calling it "staggering hypocrisy".
Financial experts note that such investment structures remain common among sophisticated investors, though they're typically unavailable to ordinary savers. The controversy raises questions about whether Labour will propose closing this particular tax loophole should they form the next government.
