You are here: Home - Retirement - Retirement planning - News -

Will you lose in the chancellor’s £30bn tax raid?

0
Written by: Emma Lunn
01/09/2020
The government is rumoured to be planning radical changes to be announced in the Autumn budget – with middle classes taking a hammering.

Fuel duty and corporation tax could rise, and pension tax relief reformed, under Rishi Sunak’s plans to recoup cash spent during the coronavirus pandemic.

The proposals are reported to have been drawn up by Treasury officials as options for the next budget, which is likely to be held sometime in November.

Some of the plans Sunak is rumoured to be considering include aligning capital gains tax with income tax. This would see the charge on profits from the sale of second homes and other assets rise from 28% to 40% for the better-off.

Firms could also see a rise in corporation tax, with a possible hike from 19% to 24%.

Fuel duty

Sunak is also rumoured to be considering ending the 10-year freeze on fuel duty, in a move that would anger drivers.

The move would automatically add 2p a litre at the pumps, as the price would go up in line with inflation. But the Sun has reported that a Treasury source says it has plans for an extra 3p on top.

Campaign group FairFuelUK said it would fight tooth and nail against the rumoured rises.

Howard Cox, founder of the FairFuelUK, said: “Do not make the world’s highest taxed drivers, the fiscal fall guys in a post pandemic recovery budget. And hiding behind a green driven agenda to hike a regressive tax will be disingenuous and hit low-income drivers hardest. Instead, put much more money into people’s pockets.

“The extra consumer spending to drive up GDP, and all that goes with it, will help the economy recover quickly, the environment long term, and restore confidence in our beleagered government. But by hitting drivers more in their pockets will driver Tory voters away from the once popular Boris.”

Changes to pension tax

Sunak could also potentially remove pensions high tax relief – higher earners currently benefit from 40% relief.

Steven Cameron, pensions director at Aegon, said: “Ending higher rate pensions tax relief would be a particularly harsh change for anyone contributing to a pension and paying 40% income tax or above, many of whom don’t regard themselves as ‘high earners’.

“Cutting the government top-up from 40% to 20% would half this important incentive to save for retirement at a time when it’s more important than ever to be saving for an uncertain future. A more modest reduction to say 30% would still mean the chancellor collects significantly more income tax, without risking higher rate taxpayers thinking twice about their retirement savings.”

The so-called triple lock on state pensions, which guarantees they rise at least as much as wages or inflation, is under threat too. Changing this could see the Tories lose many elderly voters.

Cameron said: “Simply scrapping the triple lock would be seen as a major U-Turn on a key manifesto commitment which would go down very badly with pensioner voters.

“But leaving the formula unchanged when average earnings are falling this year and may rocket next, could grant state pensioners a huge increase in 2022 which would not go down well with the working age population who pays for this through national insurance. Adjusting the formula for example by averaging out earnings growth over two years could strike a fair balance, while retaining the principles.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Santander current account shake-up: Act now

From tomorrow, Santander will double the monthly fee on the 123 Lite current account while the cashback catego...
Santander current account shake-up: Act now

Countdown to new tax charge for freelancers and contractors

Freelancers and contractors have just five months to get ready for employment tax changes that will affect how...
Countdown to new tax charge for freelancers and contractors

SEISS ‘paid out more than £1.3bn to thriving businesses’

The Resolution Foundation claims the government’s £12.7bn Self-Employment Income Support Scheme (SEISS) has be...
SEISS ‘paid out more than £1.3bn to thriving businesses’

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
Furlough changes take effect from today

Employers now have to start paying national insurance, pension contributions and 10% of staff wages.

Close