The Chancellor must find a way to raise billions in the Budget - here's what she could do
However, the chancellor is in the awkward position of having ruled out the usual methods of raising big money – through income tax, national insurance or VAT – in Labour’s manifesto.on national insurance . This is a somewhat controversial move given that Labour had ruled out an increase to NI in its manifesto – however Rachel Reeves this week said the pledge only related to what employees pay, and not employers.
Firms would also be less likely to offer salary sacrifice schemes, as this would cost them extra money. These schemes are very popular and mean employees can pay more into their pension to keep their salary lower, which can reduce tax bills and keep free childcare entitlements. Meanwhile, the duty has been frozen for over ten years so it could be argued it’s time for it to be reviewed, and a move to increase it could be argued as being a “green tax” to encourage the move to electric cars.
This is because property tax take can sometimes be somewhat counterintuitive: when the Conservatives lowered the rate from 28 per cent to 24 per cent at the last budget, the Office for Budget Responsibility said that doing so would actually raise nearly £700million because of increased property transactions.
Last month the boss of Next, Simon Wolfson, sold £29million of his shares in the company, leading to speculation among City analysts that the sell-offs were in anticipation of a CGT increase, which, according to some reports, may go as high as 39 per cent. The prime minister said this week that speculation around the tax increasing that high were “wide off the market” and Blick Rothenberg said they expect the increase to be to 30 per cent.
“If all of a sudden that money became subject to a new pensions death tax, those people would, understandably, feel like the rug has been pulled from under them,” Selby adds. “It is therefore possible a complicated protection regime would be needed to ensure people are not subject to unfair and arguably retrospective tax measures. This would inevitably reduce the money the Treasury could potentially raise from such a move.
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