Budget Resolution No. 8: Capital gains tax (investors' relief)

Budget Resolution No. 8: Capital Gains Tax (Investors' Relief) House of Commons, 6 November 2024

What happened: The House of Commons voted on Budget Resolution No. 8, which covers changes to capital gains tax investors' relief, a tax break that reduces the rate of capital gains tax paid by certain long-term business investors when they sell their stake in a company. The resolution passed by 400 votes to 122, with the government comfortably securing the result.

Why it matters: Capital gains tax investors' relief has allowed qualifying investors to pay a reduced rate of capital gains tax on profits from selling shares in unlisted trading companies, provided they have held those shares for a minimum period. By passing this resolution, Parliament endorsed the government's Budget proposal to reduce or remove that relief, meaning investors who sell qualifying business stakes will face a higher tax bill on their gains. The practical effect is to increase tax revenue from wealthier individuals who profit from long-term business investments, while removing an incentive that successive governments had used to encourage patient capital investment in growing businesses.

The politics: The vote divided sharply along party lines. All 336 Labour MPs and all 37 Labour and Co-operative MPs voted in favour, joined by the SNP's nine MPs, all four Plaid Cymru members, all four Greens, and most independents voting. Against were 107 Conservatives, five Reform UK members, three Democratic Unionists, and four independents. No party crossing to vote with the other side was recorded among the major groupings. The vote is part of a wider package of tax-raising Budget measures the government has been pushing through Parliament in late 2024, including changes to national insurance contributions and business rates, all of which have followed similarly clear government majorities.