Keir Starmer Hints at Possible Tax Hikes on Asset Income

Ministers are likely to announce increases in inheritance tax and capital gains tax (CGT) in next week’s budget. Before these expected tax changes, the government is under pressure to explain its promise not to “raise taxes on working people.”

When asked if someone who works but also earns from assets like shares and property is considered a “working person,” Keir Starmer told, “They wouldn’t fit my definition.”

The prime minister’s spokesperson later explained that Starmer was referring to people who mainly get their income from assets and wasn’t excluding people with only a small amount in stocks and shares.

When asked if taxes for these people might go up, Starmer replied, “You could give me any number of examples. You’re asking for a definition of ‘working person,’ then making guesses about the tax.”

The question of who counts as a “working person” has grown after ministers wouldn’t rule out raising employer national insurance in the budget.

While traveling to the Commonwealth summit in Samoa, Starmer explained that he thinks of working people as those who earn a living, might have some savings, but can’t easily afford to pay large amounts if they face financial trouble. “Those are the people I’m thinking about when making decisions,” he said.

Starmer and Chancellor Rachel Reeves have both said that they will need to make “tough decisions” in the budget.

Starmer has suggested that capital gains tax (CGT) on shares and other assets, currently capped at 20%, will go up by a few percentage points.

However, ministers are likely to keep CGT on property sales the same due to worries that a higher rate could slow down sales and reduce revenue. In the last budget, the Conservatives reduced the top CGT rate on property from 28% to 24%.

Chancellor Rachel Reeves is also considering stricter rules on inheritance and gift taxes, which currently apply to only about 1 in 20 UK estates.

On Friday, Treasury minister James Murray avoided saying whether a landlord qualifies as a “working person” under Labour’s promise not to increase taxes on “working people.” He told, “Working people are people who go out to work for their income.”

When asked repeatedly if landlords count as working people, Murray emphasised, “We’re talking about where people get their income.” He assured that any changes would align with Labour’s manifesto promises.