Sir Keir Starmer forced to rule out capital gains tax on family homes

Sir Keir Starmer with Wes Streeting, the shadow health secretary, at a Nottinghamshire hospital - Stefan Rousseau/PA Wire

Sir Keir Starmer has been forced to rule out levying capital gains tax on the sale of family homes after 24 hours of disarray on the party’s position.

The Labour leader said the idea was “never policy”, but one of his shadow cabinet colleagues dodged questions on Saturday about whether the party could increase CGT on the sale of other assets if it came to power.

Currently, people who sell their main home do not pay capital gains tax because of private residence relief. The Conservatives have promised not to change the rules and urged Labour to match that commitment.

On Friday afternoon, a Labour spokesman tried to shut down speculation that the party could tax primary residences, only for Sir Keir to reopen the issue by refusing to rule it out in a BBC interview broadcast later that evening.

Asked by The Telegraph to clear up the apparent confusion during a campaign visit to a hospital on Saturday, Sir Keir said: “It was never a policy.”

Pressed on whether he would explicitly rule it out, he said: “Absolutely, it was never a policy so it doesn’t need ruling out, so let’s rule it out in case anybody pretends that it was.” He confirmed that this would apply for the whole Parliament.

However, Labour has left the door open to increasing the rate of CGT on the sale of other assets such as shares. Appearing on Times Radio on Saturday, Liz Kendall, the shadow work and pensions secretary, was asked: “Can you rule out that there will be a rise in capital gains tax under a Labour government?”

Ms Kendall replied: “We would not put capital gains tax on people’s primary homes.”

Pushed on whether it could go up on other assets, she responded: “I do not want to see taxes on working people go up… there is nothing in our manifesto that requires any other tax increases than the ones we have set out.”

Bim Afolami, the Economic Secretary to the Treasury, said: “Labour are in chaos over capital gains tax with three U-turns in less than two days.

“The British people deserve to know: what’s Labour’s real position and will they commit to ruling out the 18 tax rises that we have ruled out in our manifesto?

“In stark contrast to our manifesto that cuts taxes, Labour’s manifesto contained no tax cuts – just tax rises. It is a tax trap manifesto from a Labour Party that has tax rises coded into its DNA. Be in no doubt that their £2,094 tax rise for working families is only the tip of the iceberg.”

The rate of CGT depends on an individual’s income level, with basic rate taxpayers paying 20 per cent on gains from property which is not their primary residence, whereas those who pay higher rate tax will pay 28 per cent for properties sold in the 2023-24 tax year, and 24 per cent for properties sold in 2024-25.

For other valuable assets like shares, basic rate taxpayers pay a CGT rate of 10 per cent, and for higher and top rate taxpayers it is 20 per cent.

The Conservative manifesto unveiled this week pledged £17 billion of tax cuts. The Labour manifesto proposed £8 billion worth of tax rises, including applying VAT to private school fees.

However, the Institute for Fiscal Studies think-tank has accused Labour, the Tories and the Liberal Democrats of adopting a “conspiracy of silence” on the scale of hard decisions needed after the election on July 4.

Ms Kendall insisted that Labour could make its sums add up by boosting economic growth. “What I would say about the IFS is this,” she said. “I have huge respect for them, but they are people who look at the fiscal envelope, they look at budgets.

“They’re not looking at the economy and how we grow the economy. I do not accept that the only envelope that we have is the current failing envelope under the Tories. We have a different approach, which is to grow the economy.”

Elsewhere on Saturday, Labour outlined its plan to end the cancer treatment backlog by the end of a first term in government.

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