Lord Kinnock’s Tax Policy Advice To Burnham: Raise Capital Gains Tax At First Budget

Former Labour leader Lord Kinnock has urged Prime Minister Andy Burnham to tax capital gains at the same rates as earnings, although Downing Street says it has no plans to adopt the proposal.

Lord Kinnock has advised Andy Burnham to raise Capital Gains Tax at his first Budget, arguing that income generated from selling assets should no longer receive substantially lower tax rates than earnings from work.

The former Labour leader said aligning Capital Gains Tax, or CGT, with Income Tax could bring in about £12 billion a year. The figure is an estimate advanced by supporters of the reform rather than an official Treasury forecast, and the amount collected would depend on the policy’s design and how taxpayers responded.

Downing Street subsequently said there were “no plans” to introduce the change. Chancellor John Healey is due to deliver the government’s first Budget on Wednesday 28 October 2026, when any significant tax measures would normally be announced.

What is Lord Kinnock Proposing?

Kinnock’s tax policy advice would narrow the gap between the rates applied to earnings and those charged on taxable profits from assets such as shares, investment properties and some business disposals.

For the 2026/27 tax year, most individuals pay CGT at 18 per cent while their combined income and gains remain within the basic-rate band. The higher rate is 24 per cent. By comparison, he main Income Tax rates in England, Wales and Northern Ireland are 20, 40 and 45 per cent.

Kinnock argued that the government could spread the tax burden away from people whose earnings are taxed through PAYE and towards those who receive income through capital gains. He suggested the additional revenue could contribute to public finances or help fund changes to social care.

The proposal would not mean that every property sale was taxed. People do not usually pay CGT when selling their main home, while taxable gains are reduced by an annual exempt amount, currently £3,000. Different rules and reliefs can also apply to business assets and other disposals.

For London, a higher rate could be particularly relevant to landlords selling investment properties, shareholders realising gains and business owners disposing of taxable assets. However, the effect on each seller would depend on their income, the size of the gain, available reliefs and the final policy wording.

Poll Finds Support for Taxing Wealth Above £10 Million

Kinnock’s intervention came as a BMG Research poll for The i Paper found that 66 per cent of British adults supported a wealth tax on assets worth more than £10 million.

A wealth tax and Kinnock’s CGT proposal are not the same policy. A wealth tax would be based on the value of assets held above a specified threshold, while CGT is generally charged when a taxable gain is realised through a disposal.

Andy Burnham said before entering Downing Street that he did not want to introduce new divisions by immediately targeting one group through the tax system. He nevertheless left open the possibility of asking some people to contribute more at a later stage.

The Prime Minister has previously argued that Britain taxes work too heavily in comparison with wealth. At the same time, he has committed himself to Labour’s 2024 manifesto promises not to raise the headline rates of Income Tax, National Insurance or VAT, leaving capital, property and business taxes among the areas attracting attention before the Budget.

Kinnock’s influence carries personal significance for Burnham. The Prime Minister has described the veteran politician as an inspiration and thanked him as one of his mentors after becoming Labour leader unopposed on 17 July. Burnham entered Downing Street three days later.

For now, equalising Capital Gains Tax and Income Tax remains advice from Lord Kinnock rather than government policy. The next confirmed opportunity for ministers to set out any change will be Healey’s Budget on 28 October.