THE CHANCELLOR could cut tax relief for pension contributions of richer voters, after shelving plans for a tax based on higher council rates for expensive properties.
George Osborne has, however, promised to strike a balance between a planned scale-back on welfare – expected to achieve a further £10bn of benefit savings by 2015/16 – and new taxes on the wealthy, reports the Financial Times.
While he maintains the move is not part of a “trade-off” with the Conservatives’ Liberal Democrat coalition partners, the search for new revenues is coming to a head in the run-up to his Autumn Statement on 5 December.
Osborne has to hand in his final proposals to the Office for Budget Responsibility by 28 November.
He reportedly met with coalition colleagues on Monday to outline his options, with moves to reduce the tax relief available for wealthier voters on their pensions apparently “on the table”.
In his 2010 emergency Budget, Osborne cut the maximum annual pension contribution exempt from tax from £255,000 to £50,000.
This year’s Autumn Statement is expected to see the maximum contribution dropped to £40,000, which would bring in about £600m, while a further cut to £30,000 would generate £1.8bn, but would likely anger Tory voters.
Other changes expected on 5 December include the use of major investments from wealthy foreign migrants to speed up their settlement in the UK to create a dedicated youth unemployment fund or “Big Society Bond”.
New council tax bands are out of the question after the prime minister expressed concerns it would alienate traditional Tory voters.
As a result, an alternative under consideration is an increase in stamp duty land tax on property sales, although it is thought any additional yield from the step will be modest, with about £70m expected from increasing the 5% rate for properties between £1m and £2m to 6%.
Following recent issues with HMRC’s personal tax computation software, Brian Palmer of the AAT questions whether the government’s implementation timeframe for Making Tax Digital is realistic
The first phase of a process to restrict the amount of tax relief for residential landlords to the basic rate of tax will enter into force on April 6
Richard Le Tocq, head of Locate Guernsey, discusses the chancellor’s approach to high net worth individuals, and why relocation is increasingly attractive to HNWIs
The firm says that the U-turn 'does not alter the need for a fundamental review of the way we tax work' and that the current tax system is in need of reform