Overview
- Reports on Tuesday say Healey has rejected equalising capital gains tax with income tax after HMRC and Treasury modelling warned big CGT hikes could cut revenue and prompt investors to delay sales or leave the UK.
- The Institute for Fiscal Studies estimates a roughly £35 billion gap by 2030–31 and says a 'steady-as-she-goes' Budget is not viable because higher inflation has eroded departmental budgets.
- The Resolution Foundation has urged about £8 billion of immediate tax measures, including a 2p income tax increase offset by a 2p employee National Insurance cut and closing CGT loopholes to rebuild fiscal headroom.
- Several high-profile levies, including a proposed warehouse tax and a lower mansion-tax threshold, appear to have been dropped or de-scoped, narrowing politically acceptable revenue options under Labour’s manifesto limits.
- Markets and the Bank of England are watching the Office for Budget Responsibility update ahead of the Budget because rising gilt yields and higher interest costs have already reduced the government’s fiscal buffer and will shape which policies are credible.