The recent increase in the government’s national insurance, which was announced last week, has raised concerns that other taxes may be increased. Treasury officials admitted this week that the council tax may have to increase, as some fear the expenditure needed to pay staff with higher national employer insurance contributions, at a reported cost of $ 2 billion. of pounds sterling. Cat Little, head of public spending at the Treasury, said she “cannot confirm” whether local authorities would get compensation if it was necessary to prevent them from raising the council tax.
But there has also been speculation whether wealth taxes could be targeted by the government after Labor figures suggested they would be a fairer way to pay for health care reforms. and social care.
Treasury figures released last month show its capital gains tax receipts topped Â£ 9.8bn in fiscal year 2019/20, four times the Â£ 2.5bn sterling obtained ten years ago.
Shaun Moore, tax and financial planning expert at Quilter, believes this trend will continue.
He told Estate Agent Today: âThis is probably just the start of a record year for the amount brought in by capital gains tax and preliminary data from the Office for National Statistics already shows that it will be. “
Moore says some people may feel the need to dispose of their assets now to avoid future bills, and thinks the capital gains tax rate could be increased.
He continued, âObviously, with asset prices rising and allowances frozen or lowered, more people will eventually have to pay capital gains tax. tax advantageous manner “
And he warns: âThe amount paid in capital gains tax eclipses what is reported by inheritance tax and as such will be considered a more attractive tax to raise for the Treasury.
The fact that 41% of capital gains tax comes from those who have made gains of Â£ 5million or more suggests that a rate hike is far more likely than any other policy adjustment, in especially given the government’s triple fiscal promise not to increase VAT, income tax and national insurance puts the Treasury in a bind.
Last November, a report by the Office of Tax Simplification recommended aligning capital gains tax with income tax.
The Wealth Levy is currently paid at 18 percent on residential properties and 10 percent on other assets in the lower rate bracket.
In the highest rate bracket, they pay 28% on goods and 20% on other assets.
By aligning it with income tax, people could pay up to 45%.
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AJ Bell analyst Tom Selby told Express.co.uk last month that it was “very possible” that the capital gains tax was aligned with the income tax.
Mr Selby said: âThe proposals from the Office for Tax Simplification have come close to aligning the two taxes.
âThe impact of that would be that someone who has an asset would pay a lot more tax than they currently do.
âThere would be a big impact on owners for example, people who have second properties.
âCurrently, capital gains tax is charged at 10% or 20% depending on whether you are a lower or higher rate taxpayer.
âIf that were aligned with income tax, you would consider a tax rate of 20%, 40% or even 45%.
“So if you go this route, anyone with significant assets or multiple properties could see a big impact on their property’s value.”
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But Free Market Institute of Economic Affiars economist Julian Jessop says the tax is “triple taxation.”
He said: âThe whole problem with inheritance taxes and capital gains taxes is that a lot of them run the risk of being double or triple taxed.
âThese are investments built on the backs of income that people have already paid taxes on, so I think you should tax income and not capital, otherwise you discourage people from saving and investing.
“This is another good example of how there is no easy win here, if you want to get more money out of the economy it really has to be income based rather than wealth or something else.”