Rishi Sunak’s top 7 Budget tax targets – which one will hurt YOU most?

Rishi Sunak: What to expect from budget with Victoria Scholar

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Victoria Scholar, head of investment at wealth platform Interactive Investor, said Sunak has to balance the books after spending more than £108 billion over the last 12 months, lifting total public sector net debt to £2.2 trillion. “The Chancellor would love to cut taxes instead of raising them, but his hands are tied.” Here are his most likely targets.

Capital gains tax. Sunak’s number one tax target is likely to be capital gains tax (CGT), said AJ Bell analyst Tom Selby. “This is seen as a tax on the wealthy, and hiking it could be a popular move.”

You pay CGT when selling assets at a profit, including shares and other investments held outside of a tax-free Isa, as well as paintings, antiques and jewellery, and buy-to-let or holiday properties.

Sunak could bring today’s complex CGT rates into line with income tax at either 20, 40 or 45 percent, said Shaun Moore, tax and financial planning expert at Quilter. “This means most people will pay double the rate they do now.”

Likelihood of a CGT tax raid: 4/5.

Inheritance tax. Increasing inheritance tax (IHT) would be highly unpopular but Sunak could claim he is trying to simplify the complex system, Selby said. “He could do this by scrapping the £175,000 main residence nil-rate band on family homes.”

Alternatively, the Chancellor could cut by stealth by tightening the rules on lifetime gifts and exemptions.

Likelihood of an inheritance tax raid: 3/5.

Lifetime allowance. The highly punitive pensions lifetime allowance slaps a 55 percent tax charge on any pension savings above £1,073,100.

Right now, 1.6 million are set to pay but millions more could get caught out if Sunak cuts the lifetime allowance to £900,000 or even £800,000, as many anticipate.

Selby said it adds yet another layer of “horrific complexity” to the pension system, which far outweighs the money raised.

Likelihood of a lifetime allowance tax raid: 3/5.

Pensions annual allowance. Sunak may find it simpler to shrink the amount you can invest in a pension each year, currently set at £40,000, Selby said. “Lowering the annual allowance to £30,000 or even £20,000 would raise revenue while only affecting those who make large pension contributions.”

Likelihood of an annual allowance tax raid: 3/5.

Inheritance tax on pensions. Pensions can be passed on to loved ones free of inheritance tax on death and changing that would raise billions. “It would inevitably spark ‘death tax’ headlines– not something politicians would generally welcome,” Selby added.

Likelihood of a pensions annual allowance tax raid: 2/5.

Pensions tax relief. HM Revenue & Customs grants tax relief on pension contributions, at either 20, 40 or 45 percent. Every Budget there is speculation that this will be synchronised at 25 or 30 percent for all.

Britons turn heating OFF for winter as energy bills hit record highs [REVEAL]
House prices fear as mortgage rates rise – ‘winter of discontent’ [WARNING]
Couple cut £100,000 inheritance tax bill to zero – YOU could save too [GUIDE]

Simon Goldthorpe, joint executive chairman of Beaufort Financial: “This could net the Chancellor an immediate multi-billion-pound windfall and would only affect higher earners.”

Likelihood of a pensions tax relief tax raid: 2/5.

Wealth tax. A wealth tax would be hugely unpopular with traditional Conservative voters, but could happen, said Tom Pugh, economist at RSM. “A one-off charge on property-based assets could cut the deficit and address growing inequality.”

Any change on Wednesday is highly unlikely, Pugh said, but the Chancellor may announce a consultation on how a wealth tax could be introduced.

Likelihood of a wealth tax raid: 1/5.

Source: Read Full Article