Rishi Sunak urged to stamp down on tax ‘loopholes’ by Mullins
It’s unknown as to what will be announced at the spring Budget, however that’s not stopped experts from sharing their thoughts about what Rishi Sunak could announce. Added to that, there’s been a number of research documents published which have sparked fuel to speculation.
Taxpayers need to wait until March 3, 2021 to find out what the Chancellor has decided.
Nevertheless, following the publication of the Wealth Tax Commission report in December, one expert has postulated some potentially substantial future tax charges.
According to, Julia Rosenbloom, Tax Partner at Smith & Williamson, there could be “hefty tax rises” to come later this year.
Speaking in December 2020, she said: “Many people in the UK could be sleepwalking into hefty tax rises next year, should this week’s recommendations from the Wealth Tax Commission be taken on by the Government.
We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
“If, for example, a threshold of £500,000 in total assets for individuals is implemented, many unsuspecting people could be deemed to be as being “wealthy” by the treasury.
“This could have an especially large impact on those whose wealth comes from house value increases in large cities or land value increases in the countryside.
“If a Wealth Tax is introduced, those impacted would need to be prepared to hand over cash or potentially sell assets to cover the costs.”
Ms Rosenbloom also flagged how some taxpayers could potentially find themselves facing even greater tax payouts.
“Adding fuel to the fire, if the Office for Tax Simplification’s (OTS) recommendation on Capital Gains Tax (CGT) results in a 45 percent rate, there could be a double whammy of higher charges.
“It is almost inevitable that taxes will have to rise to pay for the unprecedented costs of the pandemic.”
So, what does the tax partner suggest in terms of tax planning?
“My advice would be to think carefully about your tax planning now, before the next Budget.
“Make use of existing tax rules before they are changed, where this fits in with your plans.
“For example, those considering passing wealth on to their children under the current seven year Inheritance Tax PET exemption might want to move quickly.”
Finn Houlihan, the Managing Director at ATC Tax, has also theorised about what tax reform measures may be brought into force.
“The coming year looks set to be a transformative one for Britain’s tax system as the government looks to restore the UK’s public finances to stability,” he said.
“March’s budget will be the defining event and should provide the clearest direction for any tax changes this year.
“The Prime Minister has ruled out a return to austerity measures, but reforms could include a one-off wealth tax, a new tax on goods sold online or the creation of a ‘Capital Values Tax’ to replace business rates.
“This would be paid by the owner of the property, rather than the business leasing it.
“The introduction of these taxes would go a long way to helping the Government generate revenue, but it remains to be seen whether they will form part of the Chancellor’s Budget.”
According to Mr Houlihan, reforms to Capital Gains Tax could also be looming, after the Chancellor ordered a review in July 2020.
He said: “Possible changes could include bringing Capital Gains Tax in line with income tax rates, which would raise an estimated £14billion a year in tax receipts, as well as reducing the annual exemption threshold, which currently stands at £12,300.”
Mr Houlihan also addressed the potential for a rise to the Inheritance Tax rate.
“Finally, another tax which could have exemptions actually increased is Inheritance Tax,” he said.
“After World War II, the existing allowance for Inheritance Tax was increased to 80 percent to accommodate for the implications of the thousands who lost their lives during the conflict.
“A similar reform may be introduced to help those who have lost loved ones due to COVID-19.”
Source: Read Full Article