The UK enjoys the lowest capital gains tax rate of any major European economy, Chancellor John Healey has said, raising the prospect of another hike at the Budget. 

Healey has said he wanted to improve the UK’s economic fortunes yet pointed to the UK’s competitiveness on capital taxes when speaking about business confidence. 

He told The Sunday Times that the UK had “lowest capital gains tax (CGT) of any European G7 nation”. 

His comments are significant due to intense speculation that the Chancellor could look to raise rates at the Budget in a bid to further tax reforms and potentially raise revenue. 

Defence secretary Wes Streeting and first secretary of state Louise Haigh have both argued that a hike in capital gains tax rates would make the overall system fairer and add to revenue. 

The Centre for Analysis of Taxation offered a note stating that specific reforms to capital gains taxes could add £20bn in further revenue by 2030. 

Economists such as former Institute for Fiscal Studies boss Paul Johnson have slammed proposals, claiming it would lead to lost receipts. 

Receipts from capital gains taxes are unpredictable due to the difficulty in forecasting investment behaviours. 

The Office for Budget Responsibility said last year that the uncertainty around forecasts stating that capital gains tax income was “very high”. Analysts at the tax advisory Blick Rothenberg have said that clients could hold onto assets for longer or change plans according to any increase in the tax rate.  

The UK has two capital gains tax rates of 18 per cent and 24 per cent, which varies depending on income bands. Canada has a higher tax rate for top earners. Italy, France and Germany have higher flat rates while Japan and the US have lower rates.

In his interview with The Sunday Times, Healey said he did not want to give “any answers or signals that will fuel Budget speculation”. 

Healey says tax rumours have ‘real-world effects’

The Chancellor has looked to maintain a tight grip over rumours after a stream of news stories before last year’s budget led to criticism from top economists, including former Bank of England deputy governor Andy Haldane. 

Healey said speculation had “real-world effects”. 

After being asked about the departure of top UK taxpayers such as Chris Rokos, he told the newspaper that he wanted billionaires to “stay here” in order to “create the wealth for us”. Healey argued he wanted to “raise the levels of business investment, business confidence [and] business profit in this country”.

He also revealed that Gordon Brown, who is a part of the government as an envoy for “global finance”, sent him texts in the middle of the night with advice on managing the UK economy. Healey described Brown as a “mentor”. 

The Chancellor also denied there was “flexibility” within the fiscal rules to loosen borrowing. 

“We will meet the fiscal rules. We’ll meet them with a buffer against uncertainty.”