Wes Streeting Proposes Capital Gains Tax Reform in Labour Leadership Pitch

BBC Business reported Thursday that former Health Secretary Wes Streeting has unveiled a capital gains tax reform plan as the centrepiece of his anticipated Labour leadership campaign.

Streeting’s Capital Gains Tax Reform Proposal

Streeting is calling for capital gains tax rates to mirror income tax bands of 20%, 40%, and 45%. A taxpayer’s applicable band would be determined by combining their earned income with profits from asset sales. He told the BBC the current system unfairly punishes work and needs replacing with a “wealth tax that works.” He estimates the reform could generate approximately £12 billion annually for the Treasury.

The proposal also targets loopholes that allow earnings from work to be reclassified as capital gains. Separately, Streeting would preserve lower rates for entrepreneurs who demonstrate genuine risk-taking in building businesses. He said the distinction was designed to protect productive investment while closing avoidance routes used by wealthier earners.

Background on Capital Gains Tax in the UK

Capital gains tax applies to profits realised from selling assets including property and shares. The current annual tax-free allowance sits at £3,000. Higher and additional rate taxpayers currently face a 24% rate on gains above that threshold. A 2024 Centre for the Analysis of Taxation report estimated that reforming the levy could raise up to £14 billion per year.

Streeting’s plan differs markedly from the Green Party’s proposal, which favours a straight annual levy of 1% on assets exceeding £10 million.

Leadership Contest Context

Streeting resigned from cabinet after telling Prime Minister Sir Keir Starmer directly that he had lost confidence in the government’s direction and intended to challenge him for the Labour leadership. No formal contest has been triggered yet. Under party rules, Streeting would need backing from 81 Labour MPs to force one.

His timing became complicated after Greater Manchester Mayor Andy Burnham secured a pathway back into parliament. Streeting acknowledged that moving immediately would have appeared designed to outmanoeuvre Burnham before his return. He said the government currently lacks both definition and a clear vision, adding that voters cannot back a party whose identity is unclear.

Beyond tax, Streeting also reiterated his view that Brexit was a “catastrophic mistake” and said the UK should eventually rejoin the European Union, subject to a clear democratic mandate from the public.

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