Treasury officials are proposing a number of dramatic tax hikes in an attempt to reverse the UK’s piling public debt and ward of a recession. The Chancellor is looking to target capital gains tax, corporation tax and pension tax relief in a bid to raise at least £20billion in extra funds after the coronavirus crisis haemorrhaged the public purse.
Some of the new measures could be introduced as early as the autumn budget, which Chancellor Rishi Sunak is expected to announce in late November.
Though the plans have yet to be finalised, the £20billion tax raid is expected to largely affect the wealthy, businesses, pensions and foreign aid.
If the measures are approved second-home owners could be hit especially hard, as the Government looks to bring capital gains tax in line with income tax.
The move would see capital gains tax almost double to 40 or even 45 percent, instead of the current 28 percent.
The changes to capital gains tax will also affect owners of buy-to-let properties when they sell their houses.
The hike in capital gains is expected to raise up to £14billion a year.
The Treasury is also considering hiking corporation tax from 19 to 24 percent, which would raise £12billion next year alone, the Sunday Times reports.
By the 2023-24 financial year, the move would raise a whopping £17billion.
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The Treasury will also look into removing loopholes in the inheritance tax system.
The proposed measures seek to avoid raising income tax.
A Treasury source told the newspaper: “If we don’t do something strategic then we’re stuffed.
“What we don’t want to do is increase income tax rates.”
The new measures would target those with “unearned” rather than “earned” income, which is believed to be a popular move among voters.
A Tory ally said: “The political reality is that the only place you can get the money is from the better-off. The polling shows this would be popular.”
The bombshell measures show the Government is determined to reverse the UK’s dire economic outlook, which has seen Government debt soar well above £2trillion.