Published On: Sun, Aug 30th, 2020

Tax increase: Is Rishi Sunak putting taxes up to pay for coronavirus? | Personal Finance | Finance

Coronavirus has not come cheap to the Treasury – with the UK now in its deepest-ever recession, and millions still dependent on aid such as the furlough scheme and Universal Credit, the Chancellor and the Treasury are reportedly looking for ways to plug the hole in the form of tax increases.

A new budget will be coming from the chancellor in November, with a raft of new tax proposals expected to be included in Rishi Sunak’s coronavirus recovery plans.

Government debt now stands at around £2trillion – with few signs of slowing down even though lockdown has ended and the economy is slowly beginning to open up again.

No tax increases are often the mainstay of any Tory Government manifesto – but we live in highly unusual times and Mr Sunak needs to find a way to pay for costly schemes such as furlough and Eat Out to Help Out.

The remarkable move of taxing the better off comes after months of people having their finances decimated due to coronavirus – particularly those in hospitality and non-essential retail industry.

Couples can combine their allowance and pay only on gains totalling more than £24,600.

Mr Sunak ordered a review of CGT in July, and the blueprint for raising it will see the better off pay for COVID-19 black hole.

This is reportedly being raised to the same rate as income tax, which will raise some £14billion for the Treasury.

This would mean second homeowners and those who own buy-to-let properties would pay CGT at 40 percent instead of the current 28 percent.

Family businesses that live off company dividends rather than a salary would also see their taxes soar.

However, the changes would not affect a family’s main home.

When Jeremy Corbyn’s Labour proposed taxing capital gains and dividends as income at the last election the move was costed at £14billion by the Institute for Fiscal Studies.

Labour also proposed raising business tax to 26 percent.

The Tories opposed both, given that not raising taxes is a mainstay of any Tory economic policy.

Treasury officials are also looking at how to get extra money removed from the foreign aid budget.

Around £2.9billion has already been siphoned from the budget of £15.8billion.

It is also looking likely that the self-employed will face a tax hike – which was hinted at when he announced their financial scheme back in May.

Pensions are also likely to be on the table – it has long been discussed that the Triple Lock could be scrapped, as well as changes made to pensions tax relief – which helps those paying higher rates of income tax to save for their retirement at a beneficial rate. 

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