August 31st 2020 1:24 pm

Written by Daniel Flynn

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Rishi Sunak's Autumn Budget Tax Increases

Use this calculator to see how drastic the effect on income tax could be as the Chancellor is being warned against raiding wealthy Conservative voters.

Earlier in the year when the first rounds of support measures were being deployed spending cuts and increased taxes were thought to be the overall fallout.

We have previously speculated on the more drastic measures to raise tax receipts that Chancellor Rishi Sunak could take, including increasing income tax. It is now being reported that an array of sweeping tax changes are possibly afoot for the Autumn Budget.

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The effect of the pandemic on the nation's finances has been extensive with national debt now at £2 trillion. Vast swathes of the country are being supported financially through schemes such as job retention furlough and grants for the self-employed.

In response it is being reported that Sunak is looking to raise an additional £20 to £30 billion per year through fiscal changes.

Measures being considered include raising corporation tax. Corporation tax is currently sitting at a world low 19 percent. Increasing this sharply to 24 percent would raise £12 to £17 billion over the next few years.

A change to the way pensions tax relief would possibly remove the incentives for higher earners to contribute to pensions as the relief on higher rates could be limited or removed - something that has been speculated in pre-Budget predictions for over a decade.

The foreign aid budget could also be lowered or restructured according to the Sunday Times.

Additionally over the last few weeks we have had reports of a two percent sales tax on internet shopping, the possiblity of a new tax to make contributions towards later life care costs from age 40 onwards and the overhauling of the capital gains tax system to target wealthier people.

The wealthier conservative voting base will not be charmed by the increases to corporation tax, lowered pension reliefs, restructured capital gains as these will target them mostly - Sunak is already receiving hostility from those responsible for keeping the Conservative Party in power.

The country faces much to contend with going forward. We here in the UK are already seeing the largest recession compared to other wealthy countries, and even though there have been glimmers of hope, it is feared once the furlough support and grants and even eat out to help out come to an end, the small recovery would end and recession would continue to deepen.

There is also the fast approaching exit from the European Union, with no concrete trade deals still in sight.

See more articles from August 2020

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