express– Chancellor Rishi Sunak is announcing the Government’s spending plans today as the UK looks to climb out of recession. He has so far announced that the Government will look to “provide a pay rise to over a million nurses, doctors and others working in the NHS”. However, the Chancellor warned that the economy still has a tall mountain to climb after “the “largest fall in output for more than 300 years”. As a result, reports sugest Mr Sunak could announce increases to corporation tax and capital gains tax at the same rate as income.
Since the first lockdown in March, the UK has been forced into a series of precautionary measures in an attempt to limit the spread of the coronavirus pandemic. However, these restrictions have taken a big toll on the economy.
Tax rises will have no doubt been considered by Mr Sunak, and his announcement today explained how these could come into effect.
It comes after some were concerned after the Office of Tax Simplification suggested changes earlier this month.
The independent office of HM Treasury posed the idea of making changes to the capital gains tax (CGT) that could see, for example, the annual tax free amount drop to as little as £1,000
Double-taxing heirs on both CGT and inheritance tax (IHT) was also noted as an idea.
Lesley Davis, partner in the private client team at law firm Shakespeare Martineau, said earlier this month that IHT could well be targeted.
She said: “If the potentially exempt transfer exemption is removed, inheritance tax will become payable on any gifts over just a few hundred pounds in value.
“More worryingly, if spouse exemption on death is cut then families will have to sell their assets to pay the tax owed. Or, if the nil-rate band of £325,000 is reduced, a tax levy at 40 per cent will apply to the inheritance of a deceased married couple’s children.
“No matter which of these elements of inheritance tax are targeted, many individuals and families will be hugely affected. An increase in capital gains tax could mean a large reduction in profit on the sale or transfer of capital assets.
“Anyone who owns their own home and has a level of savings could well find themselves impacted, making them less able to pass on their assets to their children in future.”
Tax Research UK’s Richard Murphy said last year that IHT should be scrapped for a fairer system.
He said: “Because it collects relatively little money there are a great many options for replacing IHT.