Keir Starmer wrong to suggest taxes aren’t rising on stocks and shares

7 April 2022
What was claimed

People earning money from stocks and shares won’t pay a penny more in tax as a result of the government’s policy changes.

Our verdict

False. Dividend tax is increasing in line with National Insurance.

“Today the government chooses to impose a new tax on people and it's only on working people by the way, so if you’re working you get taxed. If you’re a landlord with very many properties, if you make your money from stocks and shares, you don’t pay a penny more as a result of the changes today.”

On Good Morning Britain, Labour leader Sir Keir Starmer spoke about the 1.25 percentage point increase in the rate of National Insurance, noting that it isn’t paid on income from rent or stocks and shares.

While this is correct, it is false to suggest that people earning money from stocks and shares will therefore not “pay a penny more as a result of the changes today”, as the government has also just increased the tax rates for dividend income.

National Insurance is a tax paid on earnings. It isn’t paid on rental income, nor is it paid on the sale of stocks and shares, or money paid by companies to owners of stocks and shares (dividends).

When people make money through selling stocks and shares or dividends, those incomes are instead subject to capital gains tax and dividend tax respectively.

In the autumn 2021 budget, there were no changes announced to the rates, allowances, or exemptions for capital gains tax.

However, the rate of dividend tax was increased by 1.25 percentage points, mirroring the rise in National Insurance rates.

In December 2021, the government said that the increase in dividend tax “will ensure those with dividend income make a contribution in line with that made by employees and the self-employed on their earnings.”

This means it's misleading to suggest that people who make money from dividends are not paying more as a result of changes coming into effect on 6 April 2022, the start of the tax year, just because they won’t be affected by the National Insurance rise specifically.

In the interview on Good Morning Britain, Mr Starmer went on to claim the Conservatives have raised taxes 15 times in two years, a figure which, in Labour’s press release, includes the rise in dividend tax rates.

Full Fact approached the Labour party for comment but had not received a response at the time of publication.

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