Contractors may be hit with a tax hike on businesses, pensions and second homes in Autumn budget
The Treasury is currently putting together Autumn Budget plans for a ‘£30 billion tax raid’ that is aimed at the wealthy and businesses as well as pensions and foreign aid, a Sunday Times article suggests.
Chancellor Rishi Sunak already hinted that the self-employed would have to pay higher tax when he announced the £8 billion Self-employment Income Support Scheme to help them at the height of the pandemic.
COVID-19 has seen Government debt increase to above £2 trillion. The blueprint of the Budget sees to reclaim some of that money with income tax and corporation tax being at the centre.
Self-employed could face income tax hike
At a Treasury Select Committee hearing, experts from four think tanks – Resolution Foundation, Institute for Fiscal Studies (IFS), Institute for Government and Institute for Economic Affairs (IEA) – gave suggestions on how to repay the Government’s debt.
On the agenda were rises to income tax for the self-employed, VAT and national insurance – all of which could have a significant impact on contractors who work through their own limited company.
Paul Johnson, IFS’s director, explained that rises in those should be expected in the medium-run as that is where a substantial amount of income comes from. Experts suggested an increase of two to three per cent on income tax, meaning contractors’
take-home pay would go down.
Tax rises risk ‘stamping out recovery’
Sunak is also considering raising corporation tax from 19 to 24 per cent in the Autumn Budget – a move which would bring in an estimated £12 billion. COVID-19 has hit many companies hard and with profit much lower, the rise in tax could become burdensome.
Many business groups have already raised concerns, stating that a potential rise in tax could risk “stamping out the recovery”. The proposals have also sparked a backlash from Tory backbenchers. MP for Wokingham, John Redwood wrote on Twitter: “You cannot tax your way to faster growth and more prosperity. We need policies to promote more jobs and activity to get the deficit down.”
Capital Gains Tax changes expected
Capital Gains tax is under consideration in the Autumn Budget. In July, Sunak ordered a review of this tax with a view to reform it so it is paid at the same rate as income tax. Under the current proposals, tax on profits from selling assets would rise from 10 to 20 per cent for basic-rate taxpayers. And for profits on the sale of second homes, it would increase from 18 to 20 per cent. For higher-rate and additional-rate taxpayers, this levy could rise to 40 per cent. This move could raise up to £14 billion a year for the Treasury from the wealthy.
The Treasury’s view is that this policy change would make the tax system fairer. However, Conservative MPs and businesses argue that it would penalise middle-income earners the most.
Chancellor eyes controversial move on pensions
Pensions is also reportedly on the taxman’s list. The triple-lock pension, introduced in 2010, ensures that the state pension increases each year by 2.5 per cent, the rate of inflation or the average earnings growth – whichever is highest. This is under threat – something that would be controversial given the Conservative Party pledged not to touch it only last year. However, proposed changes could save the Treasury up to £8 billion a year.
Andy Chamberlain, director of policy at IPSE, said: “The economic recovery will be powered by the UK’s smallest businesses – those who work for themselves – but only if the Government creates the right conditions for them to do so.
“Media articles over the weekend which point to significant increases in the taxation of these businesses are therefore very concerning. Many businesses are hanging on by a thread as a result of the economic collapse caused by the pandemic. Now is not the time to hit them with a tax hike, but rather to nurture and support them so that they in turn can fuel the recovery.”
By this time next year, after a few more rounds of fake pandemic and fake second-third-fourth-fifth waves, when the economy has been completely decimated, worldwide communism will be rolled out to “rescue” us. End of all private property, 24×7 monitoring by Big Tech, complete control of all speech and subsequently control of thought too, using brain-augmented chips.
Whether the chancellor introduces one new tax or three will be a moot point.
your Spot on with what you say! I do hope you didn’t intend it as satire!
This entire thing ahs been orchestrated from the start! people chant back why would governments in charge hurt their on economy’s! but of course its not their own money, its ours they are using. and what little pain that the big corps are feeling during this nonsense they will recoup 100 fold when all smaller businesses are wiped out. when all of use contractors and small businesses are taxed in to oblivion and of course a quazi-communistic style of rule which has already started with enforcing rules and stating they are for not only our safety but the safety of your loved ones “the apple for the people” totalitarianism 101! all because people are under educated in the most basic of biology!
If they managed the country using modern monetary theory (MMT) instead of like a household they wouldn’t need to tax so heavily. They are a currency issuer not a user.
MMT sounds like it would work fine right up until the moment people realise that, if you can just create money out of thin air, it’s worthless
Once Sunak stops playing Santa his popularity will plummet.
IR35 changes will be scrutinised and people will ask how he could force through those changes when his father in law is co-founder of Infosys (2nd largest Indian consultancy) – and consultancies are the big winners in IR35, since it gimps their competition.
Farage needs to get that Reform party up and running soon – we need a right of centre party and we haven’t had one for years.
Well, that’s a catchy headline with not a lot of substance.
The triple lock – that’s hardly contractor specific. The triple lock was never sensible, roll 3 dice a year and take the biggest? When the lock was introduced it would have been sensible to take that level of state pension as a base point and work out the pension under each index and then take the highest of those 3. Still a triple lock but cumulatively less extravagant.
Increase in tax on profit – well, profit is what is surplus after the costs of doing business so eminently taxable. If the rate is too high pay yourself a salary.
Capital Gains Tax – again not contractor specific. Maybe those who disguise income as capital gains will be hurt – but that just looks like closing a tax planning loophole.
Hang on tax rises for the self employed
WE ARE NOT SELF EMPLOYED
As for raising the pension and additional taxes, I would be happy to pay extra taxes
I cannot get any work because of IR35 so sorry I can’t help Rishi old bean
HMRC will be looking in the mirror and wondering why the shock money no turne upe
Hmm there is no mention of Corporation tax in the article. Corporation Tax likely to rise which will further dent Contractors’ income.