Labour is seriously considering a significant increase to Capital Gains Tax (CGT), potentially aligning it with income-tax rates. 

Such a move could have major implications for landlords planning to sell and realise capital gains. 

Sky News reports that cabinet ministers have examined a proposal outlining how Labour could reduce taxes elsewhere by challenging what it describes as “vested interests.” 

A draft policy paper produced by the Labour Growth Group and the Good Growth Foundation calls for a comprehensive overhaul of the UK’s economic strategy. Proposals under consideration include cutting income tax and potentially scrapping National Insurance, with any resulting revenue gap offset by aligning Capital Gains Tax with income-tax rates, reforming council tax or introducing forms of land taxation.

Sky News reports that the document has been reviewed by several cabinet ministers and potential leadership contenders, including advisers to Health Secretary Wes Streeting, former deputy prime minister Angela Rayner and Greater Manchester Mayor Andy Burnham. 

The full report is expected to be released shortly after the May local elections, where some analysts anticipate a challenging result for Labour.

In 2020, when Rishi Sunak was Chancellor in the government led by Boris Johnson, he asked the Office of Tax Simplification to review Capital Gains Tax as part of efforts to address a £300?billion fiscal gap created by the Coronavirus pandemic. 

Within a year, evidence began to emerge of more landlords leaving the private rented sector in response.

Zoopla data from 2021 showed an increase in the share of former rental properties coming to market. 

At the time, 7.2% of all newly listed homes for sale had previously been part of the private rented sector across the UK.