Rachel Reeves has hinted that she will target taxes rises on assets rather than earnings in next month’s Budget as No10 gives it’s biggest hint yet that cash ISAs are set to be shaken up.
The Chancellor opened the door to potential tax hikes on pensions, estates and capital gains by saying she wanted those with the “broadest shoulders” to pay their “fair share”, but ruled out a new standalone wealth tax.
Reeves confirmed this week that she is looking at tax rises in the Budget to fill a hole in the national finances estimated at £22bn caused by downgrades to productivity forecasts and U-turns on policies such as welfare reform and the cut to winter fuel payments.
Speaking on the sidelines of the IMF meeting in Washington DC on Thursday, she said: “I do think that those with the broadest shoulders should pay their fair share of tax, and I think you can see that through my actions last year at the Budget.”
Asked to define a wealthy person, she said: “Wealth is obviously different from income. So wealth is not about your annual salary.”
While some leftwing Labour MPs have urged the Chancellor to introduce a new wealth tax, Reeves ruled this out.
“We’re not going to be introducing a wealth tax,” she said. “We already have a number of taxes, though, in the UK that do tax wealth and do tax wealthy people, and some of those we did increase in the Budget last year, like putting VAT on private schools, getting rid of the non-domicile status, extended taxes on private jets.”
But asked where she might raise taxes, she added: “Judge me by my record last year.”
In last October’s Budget, Reeves increased inheritance tax on farms and raised capital gains tax.
Reeves wants to encourage investment
The comments – and the Chancellor’s distinction between wealth and income – are likely to be interpreted as a sign that there could be additional taxes on estates or capital gains.
Another asset she could target is pensions, where there has been speculation that she could make changes to the amount of cash people can withdraw tax-free from their pensions.
Reeves is also reported to be looking at halving the cash ISA limit to £10,000 to inject more investment into the UK stock market.
Currently individuals can save up to £20,000 in an ISA – either invested in stocks and shares or in cash – with the interest or gains they make free of tax. The Chancellor is thought to be considering keeping the overall tax-free allowance at £20,000, but reducing the cash limit to £10,000
On Thursday, the Prime Minister’s Official Spokesman confirmed that the Government is considering reform of ISAs.
He told journalists: “We’ve always been clear that cash savings are important for people looking to put cash away for a rainy day, and we’ll protect that.
“But we also want to get Britain investing again, so British companies can grow, and British savers who choose to can get more in return.
“No decisions have been made. We’ll continue to consider reforms to the ISA system and the balance between cash and equities.”
Reeves seeks bigger buffer
In Washington, Reeves also hinted that she is considering steeper tax rises next month to create a “greater buffer” against volatile global bond markets.
square THE I PAPER TEAM Are Budget taxes on the wealthy fair? The i Paper experts give their verdict
Read More
The Chancellor has been criticised by economists for giving herself less than £10bn of headroom against her fiscal rules that day-to-day spending is met through taxation, o in last October’s Budget and repeating the decision in the Spring Statement in March.
Forecasting by the Office for Budget Responsibility is expected to show that the scant headroom has been wiped out, forcing Reeves to come back for further taxes this autumn to ensure she does not violate the fiscal rules.
The rules state that day-to-day public spending should be covered by taxes by 2029-30 and that debt should be falling as a share of the economy by the same time.
Reeves said: “If you’re asking me would I like more headroom, of course I would, but that comes with tradeoffs.”
Pointing to uncertainty in bond markets, she said: “A greater buffer against that volatility would be helpful.”
Hence then, the article about cash isa reforms are being considered for budget no10 confirms was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Cash ISA reforms are being considered for Budget, No10 confirms )
Also on site :