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Treasury eyeing tax hikes of £20 billion, according to reports

Tax hikes of up to £20 billion are being considered by the Treasury to deal with the cost of the coronavirus crisis, it has been reported.

Ministers are looking at raising capital gains tax and corporation tax in the November Budget, according to the Sunday Times.

The money could be clawed back from pensions, businesses, the wealthy, and foreign aid, the newspaper said.

Chancellor Rishi Sunak is considering hiking corporation tax from 19% to 24% in order to boost revenue by £12 billion next year, the report indicated.

Fuel pump
It is reported that raising fuel and other duties is also being looked at (PA)

Capital gains tax might also be paid at the same rate as income tax, under the ideas being looked at.

Pension tax relief could be “slashed” under measures being considered by the Treasury to help pay for the Covid-19 crisis, the Sunday Telegraph reported.

The newspaper also said that raising fuel and other duties was also being looked at.

A revamp of the inheritance tax system and the introduction of an online sales tax was also being considered.

The international development budget could also be caught up in Treasury reappraisals due to the cost of the pandemic, it was claimed.

Foreign aid may be cut to stave off tax rises

The aid budget has already been cut by £2.9 billion from £15.8 billion this year, due to the contraction in the economy caused by the Covid-19 outbreak.

However, the Government insists it still meets its obligation to provide 0.7% of gross national income (GNI) to international development.

Treasury sources told the PA news agency that they do not comment on what may, or may not be, in the upcoming Budget.

Former Cabinet minister Damian Green, who served as then prime minister Theresa May’s de facto deputy, said he was wary about any changes to the so-called pensions “triple lock”.

The lock means the state pension increases each year in line with either wages, inflation or 2.5%, depending on which of the three figures is highest.

Mr Green told Times Radio: “I would be very wary of the Government going down that route.

“It was a manifesto commitment to keep it. I think this raft of things… feels like a standard pre-Budget, Treasury kite-flying to see what people will make of this.

“Clearly the Chancellor faces some unpalatable options because he’s rightly spent many, many billions of pounds supporting the economy and individual workers over the past few months.

“The other one on that list that I particularly wince at is the thought of breaking the commitment on foreign aid.

“I’m proud of the fact that Britain is one of the few countries that meets its commitment to have a small part, 0.7% of our GDP, spent on foreign aid and I would certainly want to see that continued.”

Prepare your business

It is not yet clear what the government may do to claw back some of the money spent during the pandemic, but getting your business in the best shape possible will help you respond quickly to changes. We have helped over 2,000 businesses access funding through R&D tax credits, a government initiative rewarding innovating UK businesses. Despite the pandemic, the scheme is still operating and available to eligible businesses to make a claim.

If you are investing in research and development you could be able to unlock vital funding to support your business. Speak to an advisor today for more information.

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