In her bid to balance the books, Chancellor Rachel Reeves faces many difficult decisions. The continuing lack of growth in the economy means she may have to opt for tax rises or spending cuts.
If you are tax planning in Cheshire, it is worth considering that the Government is being pressured to consider a ‘wealth tax’ on assets.
This issue has gained traction following the Government’s decision to drop plans to shelve winter fuel payments – worth an estimated £6 billion to the Treasury. Some of Reeves’s colleagues have been calling for a flat wealth tax aimed at people with assets over £10 million, claiming it could bring in an extra £12 billion. However, following on from its non-dom crackdown, the Treasury is nervous about whether such measures would work or, indeed, be counterproductive if their targets re-arranged their tax affairs or simply moved overseas.
There have been additional calls to look at existing taxes such as capital gains tax, which is payable on second properties or shares. While this has already been increased, bringing it into line with income tax could potentially generate £12 billion. National Insurance contributions on investment income, such as on dividends or property rent, might also bring in further revenue, estimated at around £11 billion.
Taxation has also been discussed at international level. Leading countries from the G7 have agreed on the need to tackle aggressive multinational tax avoidance, with Reeves keen to ensure there is a level playing field for UK businesses. The Government is celebrating the removal of Section 899 from President Trump’s ‘Big Beautiful Bill’, which might have imposed additional taxes on British exporters.
