Rishi Sunak has distanced himself from reports that he is looking at increasing capital gains tax to help pay for the government’s Covid-19 spending.
The Treasury announced yesterday it was commissioning the Tax Simplification Office to conduct a study “asking for “evidence to seek views about capital gains tax”, prompting speculation from financial services firms that the chancellor was going to hike taxes for property owners.
Hargreaves Lansdown said it looked like a sign of an impending “tax clawback”, after the government racked up an expected £350bn deficit this year.
However, Sunak told Westminster’s Treasury Select Committee today that the review was an administrative formality and not a signal he wants to increase capital gains tax.
“It’s a reasonably business as usual practice for the Treasury to ask the Tax Simplification Office to examine various parts of our tax system to make sure they’re up to date,” he said.
“It happens every year, so the last year or two the Tax Simplification Office looked at inheritance tax, before that they looked at capital relief, before that they’ve looked at VAT, they’ve looked at stamp duty and before that income tax and national insurance.
“So I think, actually, that capital gains tax is the only one they haven’t looked at if you look at everything they’ve done over the last few years.”
Sunak used his summer economic statement last week to announce a further 30bn of spending in an attempt to stoke consumption and avoid job losses.
It included a £2bn jobs programme, a £3bn green energy programme and a potential £9bn spend on giving money to companies that bring back furloughed employees.
Sunak also announced the “eat out to help out” initiative, which will see the government pay for half-price discounts, up to £10, when people eat out on Mondays, Tuesdays or Wednesdays.
However, talk has now already shifted to how the government plans on reducing its bulging deficit over the next several years, with some mooting potential tax rises.
Sunak told today’s committee meeting that he would not be commenting on potential taxation changes before the autumn budget.
“I would agree that strong, sustainable public financses are important,” he said.
“It’s something I believe in and, as we said last week, over the medium-term [it is something] we will want to return the public finances to.
“The exact shape and plan to to do that will have to wait for a future budget.”