UK Budget: Labour Party to Raise Capital Gains and Inheritance Taxes

The new British government, led by the Labour Party, said it would substantially raise taxes and borrow more for investment as it sought to steer the country out of a long run of economic stagnation.

Rachel Reeves, the chancellor of the Exchequer, delivered her first budget — and the first one ever by a woman — in Parliament on Wednesday. In a nearly 80-minute speech, Ms. Reeves announced about 40 billion pounds ($51.8 billion) in tax increases, more than half of which would come from higher taxes that employers pay on their workers’ salaries. She also increased capital gains and inheritance taxes.

“The choices that I have made today are the right choices for our country,” Ms. Reeves said. “That doesn’t mean these choices are easy.”

The budget was the first big opportunity for the Labour Party to set Britain’s economic agenda after it was swept into office with a large majority in July’s general election after 14 years out of power.

But after a turbulent few months in office for the Labour Party, the budget has been seen as a reset moment for the party itself. Keir Starmer, the prime minister, said this week that the budget would “light the way” toward the government’s priorities of ensuring financial stability, improving public services and encouraging investment.

For months, Ms. Reeves has warned that this budget would include “difficult” choices, signaling that Britons will have to swallow pain now for a bigger payoff later. These choices, government officials have said, will help the government achieve its goal of making Britain the fastest-growing economy in the Group of 7.