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LONDON (Reuters) – British Prime Minister Keir Starmer said on Monday that speculation about an increase in the rate of capital gains tax to as high as 39% in this month’s budget was unfounded.
The current rate of capital gains tax for higher-earning taxpayers ranges from 20% to 28% depending on the type of asset but the Guardian newspaper said last week that finance minister Rachel Reeves was considering raising it as high as 39%.
“A lot of speculation (about the tax increase) is getting pretty wide of the mark,” Starmer told Bloomberg Television in an interview at an investment summit in London.
“That’s getting to an area which is wide of the mark,” he said when asked about the 39% figure.
A finance ministry spokesperson previously said the Guardian report was “pure speculation”.
Reeves is due to announce the first budget of the new government on Oct. 30.
The Institute for Fiscal Studies (IFS) think tank estimated last week that Reeves would need to raise taxes by 25 billion pounds ($33 billion) to end a squeeze on public services implied in the last budget of the previous Conservative government.
In its election campaign, Labour pledged not to increase the main rates of income tax, value-added tax, corporation tax or social security contributions for workers, giving it limited options for raising further revenue.
Capital gains tax raises around 15 billion pounds a year – less than 2% of total tax revenue – and is only paid by 0.65% of British adults, according to the IFS.
(Reporting by Catarina Demony and Alistair Smout; Editing by William Schomberg)