Private equity firms hold their breath as Labour’s budget threatens a rise in capital gains tax
Private equity firms are anxiously awaiting the government’s first budget after Rachel Reeves did not rule out a rise in capital gains tax.
Last week the Chancellor of the Exchequer warned that tough decisions were needed to plug a £22bn budget black hole that came to light after Labour won last month’s election.
Asked whether the capital gains tax would be increased, Reeves told Bloomberg: “It’s always important to get the balance right when setting tax policy.”
Austerity: Last week, Chancellor of the Exchequer Rachel Reeves (pictured) warned that tough decisions were needed to close a £22bn budget deficit
She said her government’s position would be made clear during the budget session on October 30.
“Of course we need to generate revenue to fund essential public services, but we also need to grow the economy and I will not do anything that makes it harder to achieve that economic growth and prosperity,” Reeves added.
Capital gains tax is a levy on the profit made on the sale of an asset that has increased in value.
Higher earners pay a 24 percent levy on profits from residential real estate or 20 percent on profits from other assets. The rate can be increased to equal the income tax, which would be a 40 percent or 45 percent rate.
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