The Chancellor is being urged to raise capital gains tax to the same level as higher rate income tax to boost the public finances and “level up the country”.

The Institute for Public Policy Research says capital gains tax should be raised from its 18% to 24% range for residential property to the 40% income tax level for higher rate taxpayers.

This would raise £18.3bn by the 2028/29 tax year, compared to £14.4bn the levy raised last year, the thinktank adds.

“We propose the equalisation of capital gains tax with income tax implemented at the upcoming budget,” the body says in its report, Supporting the Status Quo.

It argues that “those in London and the South East are more likely to benefit from favourable tax treatment due to lower taxes on income from wealth”.

“A person in the North of England will have, on average, £210,000 less wealth than someone from the South East by 2030, with the problem made worse by lower taxes on wealth than income.”

Last month, Chancellor Rachel Reeves said the Labour government had inherited a £22bn black hole in the public finances from the previous Conservative administration, which she would set about filling in her 30 October Budget.

The IPPR also calls for reforms to inheritance tax, which is not liable on estates worth less than £325,000.

But after this, the standard rate above this threshold is 40%, although there are exemptions for agricultural land, businesses, some shares and pensions.

Last year this tax raised £7.5bn and affected 4.4% of estates on death in the 2021-22 tax year.

The IPPR says: “In the long-term we propose replacing inheritance tax with a lifetime capital acquisitions tax to reduce intergenerational wealth inequality in this Parliament.

“At the Budget, we propose capping inheritance tax reliefs on business and agricultural transfers to minimise tax avoidance now.”

The Chancellor faces a host of suggestions on how she should repair the public finances, boost growth and lift the quality of public services.