Capital gains tax could rise as high as 39%

Rachel Reeves is considering raising capital gains tax as high as 39% in the budget, the Guardian can reveal, in the scramble to raise funds for crumbling public services.

- Anna Isaac

Treasury modelling being reviewed by the chancellor and seen by the Guardian shows officials are testing a range of 33% to 39% for capital gains tax (CGT). The wealth tax is paid by about 350,000 people on the sale of assets including second homes and shares but at significantly lower rates than tax on wages.

Whitehall sources say there is growing concern about the limited options for tax rises to fill a hole the Institute for Fiscal Studies (IFS) thinktank says is as big as £25bn, before the budget on 30 October.

"Some very big tax decisions are being left until very late in the day," one senior source claimed. Another said the Treasury's tax-raising plans were in "complete disarray".

Reeves and Keir Starmer have repeatedly pledged not to raise taxes for "working people", ruling out increases in income tax and national insurance. But with plans for other wealth taxes in tatters, Whitehall officials and ministers are concerned that time is running out to find ways to raise money.