Rayner’s tax hikes on savers ‘would hit NHS and harm growth’ ...Middle East

Angela Rayner’s proposals to raise taxes on savers could hurt economic growth and harm the NHS, experts have warned.

In a secret memo to the Chancellor seen by The Telegraph, the Deputy Prime Minister called for eight tax increases, including reinstating the pensions lifetime allowance and changing dividend taxes.

She also suggested a higher corporation tax level for banks and extending a freeze on the additional rate income tax threshold.

Some of the proposals would raise taxes by £3bn to £4bn a year, according to estimates cited in the document. Other policies did not come with estimates.

Rayner’s document, reportedly delivered before the Chancellor’s Spring Statement in March, said reinstating the pensions lifetime allowance would raise up to £800m in tax revenues.

The allowance had placed a limit of about £1 million on how much could be saved in a pension without incurring higher tax charges.

But experts warned reinstating it could throw Government plans to slash NHS waiting lists into “chaos” and see doctors retiring early or rejecting extra work to swerve higher tax bills.

Thomas Pugh, an economist at financial services firm RSM UK, said the £4bn tax increase was “not nothing” but “is clearly not going to make a major difference”.

He said the amount paled in comparison to the £40bn increase in public spending in the last budget.

Mr Pugh added: “Some of the measures such as ending inheritance tax on Alternative Investment Market shares and restoring the £1m lifetime pension allowance could create some quite distortive side effects, such as discouraging senior doctors from working extra shifts.”

Jason Hollands, managing director at wealth manager Evelyn Partners, said reinstating the pensions lifetime allowance could “throw into chaos” the Government’s plans to reduce NHS waiting lists.

“It would reopen wounds that have only recently healed in the NHS, hitting doctors and consultants hard, and resurrecting the problem of medical professionals refusing to take on extra work or retiring early because of the punitive tax charges,” he added.

Increase in top rate tax payers

Two more proposed changes were axing a £500 tax-free allowance for dividends and increasing the tax rates paid on dividends by the most well-off.

Other proposals were to close a loophole that allows commercial property sales to avoid stamp duty if they are placed in offshore companies, and raising the rates on dividend taxes so they are close to income tax rates.

Raising corporation tax paid by banks to 30 per cent from 28 per cent would bring in up to £700m a year, according to the document.

Extending the additional rate income tax threshold freeze would raise £1.83 billion in 2029-30, rising to £2.03 billion by 2033-34, according to the wealth management company Quilter.

Shaun Moore, tax and financial planning expert at wealth manager Quilter, said Rayner’s tax proposals could have “unintended consequences”.

He said: “Extending the freeze on the additional rate tax threshold could lead to a substantial increase in the number of taxpayers subject to the top rate.

“Such policies risk dampening earning ambition, especially among those approaching the additional rate threshold.

“The combination of higher taxes and reduced allowances may discourage individuals from seeking higher earnings, potentially impacting overall economic growth.”

Mr Moore also warned that many pensioners rely on dividend income to support themselves and would be disproportionately affected, as would small business owners who pay themselves via dividends.

square ANNE MCELVOY

Rachel Reeves is flying into Trump's firestorm - and it will cost the UK

Small business owners looking to relocate

Another change was to end inheritance tax relief on shares for the Alternative Investment Market (AIM), which helps smaller companies to access capital.

The relief is falling from 100 per cent to 50 per cent in April 2026. Increasing it would raise up to £1bn a year, according to estimates in the memo.

Jason Hollands, managing director at wealth manager Evelyn Partners, described Ms Rayner’s proposals as “a tax-hikers’ wish list rather than a coherent plan”.

Removing tax relief on AIM shares would cut a valuable source of funding for small British firms, he said, dissuading them from listing on the main London Stock Exchange.

He said: “If that relief were yanked away entirely, I would expect more business owners to exit the UK and relocate to more attractive tax jurisdictions.

“If we want the economy to grow and generate the taxes we need to fund public services, we need to attract and retain wealth-creating entrepreneurs, not export them overseas.”

He warned that the changes could lead to lower tax receipts than the Deputy Prime Minister estimates as people change their behaviour to avoid the bills.

Ruth Gregory, deputy chief economist at consultancy Capital Economics, agreed the tax proposals may only raise “marginal” amounts of money.

She said more tax rises are “starting to feel inevitable” and the “Chancellor’s fiscal predicament will only get worse later this year”.

Ms Gregory said Reeves is already dealing with higher US tariffs, which are expected to hurt economic growth, and public spending pressures such as a £17bn increase in the defence budget.

Read More Details
Finally We wish PressBee provided you with enough information of ( Rayner’s tax hikes on savers ‘would hit NHS and harm growth’ )

Also on site :

• AriZona's 'Perfect' New Flavor Sends Fans Racing to the Store
• Federal worker charged with capital murder in girlfriend’s forced abortion case
• NYT Mini Crossword Answers, Hints for Tuesday, June 10, 2025