Starmer promised in Labour’s election manifesto that he would “not increase taxes on working people”, ruling out rises in income tax, National Insurance and VAT.
But he said yesterday (Thursday) that he didn’t consider anyone who owns shares and rental property a ‘working person’, which led to claims that capital gains tax (CGT) rises could be in the Budget next Wednesday (30 October).
CGT is levied on the sale of most personal possessions worth £3,000 or more, including second homes, shares not held in an ISA and business assets.
Starmer said he believed a working person was somebody who “goes out and earns their living, usually paid in a sort of monthly cheque”, but they did not have the ability to “write a cheque to get out of difficulties”.
Asked by Sky News’ political editor Beth Rigby whether he would classify a working person as someone whose income was derived from assets, such as shares or property, the Prime Minister said: “Well, they wouldn’t come within my definition.”
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The comments come as Labour’s manifesto pledges on tax have come under increasing scrutiny ahead of the Budget.
Chancellor Rachel Reeves is expected to use the Budget to raise employers’ National Insurance contributions (NICs), increase CGT on share transactions, and extend an existing freeze on income tax thresholds.
The speculation has prompted some pundits, and the Conservatives, to question whether Labour will break their manifesto pledges.
‘Many businesses kept awake at night’
Toby Tallon, tax partner at Evelyn Partners, said: “The Government has pledged that the headline rates of VAT, income tax and NICs for what it terms ‘working people’ will be frozen in the upcoming Budget, and corporation tax will be capped at 25% for the rest of this Parliament. However, it is possible changes to other taxes [that] the Chancellor has remained silent on that is keeping many business owners awake at night.
“Removing or restricting business relief for IHT or hiking CGT rates could have a considerable impact on the investment of time, energy, risk and money by business owners, which in turn could jeopardise economic growth for the UK.”
