| Britons should prepare themselves for a historic tax grab, as the Government is looking to raid capital gains, pensions, inheritances, online shopping baskets and fuel to pay for its coronavirus spending spree.
The proposed quintuple whammy of tax increases would be the largest in a generation and is expected to raise at least 20bn in just one year. Some could be introduced as early as the autumn Budget.
Proposals on the table include increasing capital gains tax to bring it in line with income tax, introducing a levy on online sales, reforming the inheritance tax system and scrapping tax relief for pensions.
The axe will fall sharply on the heads of middling earners, especially those in London and the South East, who have carefully put away and invested their salaries. Experts are warning the tax hikes could be the death knell for Britain’s fragile but recovering economy.
Under the reforms, people taking profits from the sale of stocks or an investment property would be hit by taxes of up to 40pc – up from the current maximum of 28pc. Higher-rate taxpayers who prudently save into their pension would have their tax relief slashed from 40pc to 20pc. Proposals for a tax on online retailers could hurt shoppers too, if firms pass on the cost.
Even that may not be enough to cover the bill. Analysts at the Institute for Fiscal Studies, a think tank, have calculated that Chancellor Rishi Sunak will have to raise 44bn through tax increases if he wants to avoid spending cuts.
However taxpayers are not without options. Here we take a look at the proposed changes and how savers and investors can protect themselves from the worst of what may come – from spreading sales of assets across tax years to making the most of gifting allowances to children and grandchildren.
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