UK Chancellor John Healey Rules Out Capital Gains Tax Rise in Oct. 28 Budget

Chancellor of the Exchequer John Healey will not raise capital gains tax (CGT) in the Budget he is due to deliver on 28 October 2026, Treasury sources told reporters. The decision comes despite lobbying from some Cabinet colleagues who had pushed for an increase to help fund government spending.

What was decided on capital gains tax

CGT is currently charged at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers on most gains. Ministers including Louise Haigh and Wes Streeting had argued for raising the higher rate further, according to City A.M., but Healey opted against it. Treasury sources said the concern was that a further increase could push more higher earners to leave the UK.

City A.M. also reported that other voices, including Goldman Sachs chief economist Lord Jim O'Neill, warned a CGT rise would send the wrong signal to businesses considering investment in the UK.

The alternative: a bigger levy on banks

With income tax, VAT and national insurance rises also ruled out, Healey is reported to be relying instead on a higher surcharge on bank profits to raise revenue. The bank surcharge, a tax on top of corporation tax that applies only to banking profits, currently stands at 3% after being cut from 8% by then-Chancellor Jeremy Hunt in 2023. Briefs and City A.M. reported Healey is weighing a reversal of that cut, moving the surcharge back toward 8%, a change City A.M. estimated could raise roughly £2 billion a year for the Treasury.

The banking industry has pushed back. UK Finance chief executive David Postings wrote to Healey and Prime Minister Andy Burnham this week opposing the move, according to industry-focused outlet Briefs. UK Finance's own modelling, cited in that letter, projected a £6 billion drag on economic output over five years, roughly £10 billion less bank lending by 2029, and about 4,230 fewer financial-services jobs over ten years, with about two-thirds of those job losses outside London.

Briefs also reported that JPMorgan chief executive Jamie Dimon had separately warned the bank could reconsider plans for a new London headquarters if the UK again turned "hostile" to lenders, and had called a potential one-off windfall levy on domestic banks unfair because it would leave international lenders untouched.

Shares in major UK banks fell after the reports. Briefs reported Lloyds down 2.7%, NatWest down 2.4% and Barclays down 0.7% on the day the news emerged. Separately, groups including the Institute for Public Policy Research and Positive Money have called for an even steeper bank tax to fund household and small-business support, the same report said.

Background: a new Chancellor's first Budget

Healey has held the role only since 20 July 2026, when Prime Minister Andy Burnham appointed him Chancellor, succeeding Rachel Reeves, according to Wikipedia's entry on Healey. He had previously served as Defence Secretary from 5 July 2024 until he resigned on 11 June 2026 over a disagreement on military spending allocations, the same source states. The 28 October Budget will be his first as Chancellor.

City A.M. noted that the government has already raised taxes by roughly £70 billion across previous budgets, narrowing the options available to Healey as he looks for revenue without breaking Labour's manifesto commitments on income tax, VAT and national insurance.

What remains unconfirmed

As of 20-21 October 2026, the reports on both the capital gains tax decision and the bank surcharge plan were attributed to Treasury sources and industry contacts rather than an official government announcement. The final content of the Budget, including the exact size of any surcharge change, is expected to be confirmed when Healey presents it to Parliament on 28 October 2026.