Former UK Health Secretary Wes Streeting has proposed a significant reform to capital gains tax. He described the plan as a "wealth tax that works." The proposal is a central pillar of his campaign for the Labour Party leadership. Streeting argues that the current tax system unfairly penalises those who earn income through work. He outlined his policy during an interview on the BBC's Political Thinking podcast.
Under the current system, higher-rate taxpayers pay 24% on their capital gains. Streeting's proposal would equalise this with income tax rates of 40% and 45%. According to the Centre for the Analysis of Taxation, the plan could raise £12 billion annually. The package would also close loopholes used to disguise income as capital gains. Some individuals establish personal service companies or take pay in shares to reduce liability.
Streeting has pledged to protect genuine entrepreneurs through lower capital gains tax rates. Those who take risks building companies would receive preferential treatment under the proposal. This distinction is crucial because policymakers must balance revenue generation with economic growth. Had the UK adopted such measures earlier, the debate over wealth inequality might have evolved differently. The proposal addresses a longstanding disparity between how work and wealth are taxed.
The announcement came shortly after Streeting resigned from the Cabinet and called on the Prime Minister to step down. He warned that Labour must change course or risk losing power to Reform UK. This intervention positions Streeting as a candidate focused on fiscal equity and public service funding. If implemented, the reform could reshape how investors and asset holders approach tax planning. The broader implications for the UK's investment climate remain a subject of intense scrutiny.
