Rachel Reeves says Labour does not plan to increase capital gains tax

Labour does not plan to increase capital gains tax, shadow chancellor Rachel Reeves has indicated, despite deputy leader Angela Rayner appearing to suggest rates were too low.

Prime Minister Rishi Sunak last week released a summary of his tax affairs, which showed that his tax rate was about 22% because most of his earnings came from capital gains which are taxed at a lower rate than income.

Sir Keir Starmer paid a far greater proportion of his earnings in tax than Mr Sunak – with an effective tax rate of 33% – despite the Prime Minister making 10 times more.

I don't have any plans to increase capital gains tax

It prompted Ms Rayner to hit out at a tax system “in which the Prime Minister pays a far lower tax rate than working people”.

But on Thursday, Ms Reeves argued against raising the tax.

Speaking on BBC Radio 4’s Today programme, she said: “I don’t have any plans to increase capital gains tax.

“There are people who have built up their own businesses who maybe at retirement want to sell that business.

“They may not have had huge income through their life if they’ve reinvested in their business, but this is their retirement pot of money.

“And we also have said we want Britain to be the best place to start and grow a business.”

The shadow chancellor also defended Sir Keir’s pledge that a Labour government would freeze council tax bills this year.

The Labour leader will make the promise as he launches his party’s campaign for the May local elections in Swindon, Wiltshire.

The Conservatives have noted that Labour is not committing to freezing council tax if elected at the next general election, just saying it would do so now if theoretically in power.

Ms Reeves said: “I wish there was a general election tomorrow and then we could do this now and we could freeze council tax this year.”

I can't imagine how they can even go out and claim that they'd cut council tax given that Labour councils always seem to charge more than Conservative ones

But she did not set out details, saying there is at least one more budget before the next vote “so we’ll have to see what the public finances look like”.

Labour would compensate councils for halting the council tax hike and fund the move through an extension of the windfall tax on the profits of the oil and gas giants.

Cabinet minister Grant Shapps said he would take Labour’s pledge “with a pinch of salt”.

“I can’t imagine how they can even go out and claim that they’d cut council tax given that Labour councils always seem to charge more than Conservative ones,” the Energy Security Secretary told TalkTV.