Inheritance tax and capital gains hikes ‘tempting’ for Rishi Sunak

Mr Sunak’s incoming Budget announcement has sparked speculation over what fiscal measures could be used to raise funds for the Government after the pandemic. Reports this week indicate the Chancellor will end the public sector pay freeze for millions of workers and increase the national minimum wage. He confirmed on Monday that the minimum wage will jump from £8.91 to £9.50 an hour for workers aged 23 and over from April, a 6.6 percent increase. However, the wage rise comes amid a controversial removal of the Universal Credit uplift and the Institute for Fiscal Studies think tank has warned the minimum wage increase would not offset cuts to benefits.

Former pensions minister and finance commentator, Steve Webb, told Express.co.uk wealth taxes are another “tempting” target for Mr Sunak, who could use capital gains tax and inheritance tax to bring in more cash for the Treasury.

He said: “It must be very tempting to be honest, because once you have done your National Insurance rise, there isn’t a lot left.

“So it must be very tempting to find corners of the system, thresholds, allowances or obscure rules to bring more money in.

“Sadly, one byproduct of Covid is that they’ll get more money on inheritance tax.

“A lot of people will have died sooner, so they will get more money probably next year as well from inheritance tax or capital gains tax.”

Inheritance tax and capital gains tax have already brought in record amounts in recent months, with the pandemic playing a big role in the surge of receipts.

If Mr Sunak was to target wealth taxes, he would be more likely to use stealth measures to rake in more money rather than an outright tax hike, Mr Webb adds.

He said: “I think the stealth approach is more likely. Inheritance tax is an unpopular tax, and ironically not a lot of people pay it.

“But even so, a Conservative Chancellor raising tax on inheritance would feel quite uncomfortable for him I think, so he’d rather do it stealthily.”

In his Budget last March, Chancellor Sunak extended the freeze on the inheritance tax threshold until 2026.

This time round, speculation has centred more around capital gains tax.

Various experts have indicated the wealth levy could be aligned with income tax.

READ MORE: Public sector workers pay rise: Full list of everyone who qualifies

The Office of Tax Simplification (OTS) even published a report last year, commissioned by Mr Sunak, in which they suggested aligning capital gains tax with income tax.

Gill Philpott, a tax and trusts specialist at Ascot Lloyd, wrote for FT Adviser this week that capital gains tax and pensions could be targeted in the Budget.

She said aligning capital gains tax with income tax would essentially double the rate for the wealth levy, but even this “may not be the only change.”

Ms Philpott continued: “Another way to raise capital is not to increase tax rates but to reduce reliefs or allowances.

“The OTS made a recommendation to scale back the capital gains tax exemption to below £5,000, which would bring more taxpayers into the capital gains tax net, tax growth on wealth, and increase tax take.

“With online reporting of gains, this could be achieved with little extra work for HM Revenue & Customs.”

DON’T MISS
Hoyle could refuse Sunak’s Budget statement after leaks [INSIGHT]
Brexit Britain’s minimum wage increase sparks furious Frexit uproar [ANALYSIS]
‘Dark day for drivers’ as petrol hits record high and could go higher [INSIGHT]

Ms Philpott warned pensions could also be targeted.

She added: “Another perennial favourite on the pre-Budget watch-list is increasing tax take from pensions or reducing reliefs available.

“Again, the idea that those with more wealth, in this case earned, should bear a higher tax cost could be achieved by removing the higher rate tax relief on personal pension contributions.”

Capital gains tax being aligned with income tax is an idea which was criticised by Julian Jessop, an economist from the free-market Institute of Economic Affairs.

He told Express.co.uk last month: “The whole problem with inheritance tax and capital gains tax is a lot of them are running into the risk of being double or triple taxation.

“This is investments built up on the back of income that people have already paid tax on, so I think you should tax income not capital otherwise you discourage people from saving and investing.

“It’s another good example of how there isn’t an easy win here, if you want to get more money out of the economy it really needs to be based on income rather than wealth or anything else.”

Stay connected with us on social media platform for instant update click here to join our  Twitter, & Facebook

We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.

For all the latest Business News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! TechAzi is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More