What Wes Streeting's Capital Gains Tax Plan Could Mean for You
If you sell an investment property, shares, or other assets and make a profit, you’ll pay capital gains tax on those earnings. A new proposal from Labour leadership contender Wes Streeting could significantly change how much tax you owe — and it’s worth understanding what it means for your finances.
Streeting has proposed aligning capital gains tax rates with income tax bands. Currently, higher earners pay 24% on capital gains, but under his plan, they’d pay the same rates as on employment income: 20%, 40%, or 45% depending on their tax bracket. Your capital gains would be added to your income to calculate your band. For many higher earners, this would mean paying more tax on investment profits.
The proposal aims to raise around £12bn annually and addresses what Streeting describes as an unfair system that penalises people who work for a living while allowing wealthier individuals to profit from investments at lower rates. A Centre for the Analysis of Taxation report in 2024 estimated similar reforms could raise £14bn.
There’s a catch for entrepreneurs, though: Streeting proposes lower capital gains tax rates for “genuine” business owners taking risks to build companies. He also wants to close loopholes where people disguise work income as investment gains.
Currently, the first £3,000 of capital gains each tax year is tax-free, then rates apply on anything above that threshold. Streeting’s plan doesn’t mention changing this allowance.
It’s important to note that this is a policy proposal from someone seeking the Labour leadership — it’s not yet government policy. However, if you invest significantly or own business assets, it’s worth keeping an eye on this debate. If you’re unsure whether capital gains tax might affect you, or you’re concerned about your investment strategy, chat with a tax professional or your accountant.
For now, continue managing your investments as normal, but be aware that the tax landscape for wealth could shift. Keep track of your asset purchases and profits, and stay informed through HMRC’s official guidance on capital gains tax.