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Wealthier individuals could be hit with future tax rises

To pay for the Chancellor’s extra spending

Rebecca Durrant, Partner, National Head of Private Clients
08/07/2020
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Summer statement 2020

The Chancellor’s summer Statement was, as anticipated, focused on getting the country back to work and rebooting the economy. For private clients generally there was little to report as he remained silent on tax rises which continue to loom large on the horizon.

The good news

There were announcements to support businesses retaining workers in the form of a £1,000 bonus for each employee brought back from furlough and while this will be some comfort for many, for others this is unlikely to be enough, particularly as the funds will not been seen until the new year.

There was good news for property buyers with a zero rate of SDLT on purchases of main residences up to £500,000 and reductions to VAT to support the hospitality sector, both aimed at boosting spending power.

Future tax rises on the horizon

Although these spending commitments are all positive and should help get the country back on track, we should not lose sight of the fact that the huge investment made will need to be paid for.

This ‘silent’ Statement means that it is likely that the autumn Budget will have to include some significant changes to the tax system, which could hit wealthier individuals and investors.

Income tax and national insurance represent around 45% of the UK tax take. A quick fix here would have most impact, possibly around dividend tax rates. Other areas under consideration are likely to be increases to the currently low rate of Capital Gains Tax (CGT), the already reported overhaul of the Inheritance Tax (IHT) system, and not forgetting the possibility of a wealth or property tax.

We all need to recover from this incredibly difficult period, it is likely though that we are going to feel the pinch still for some time to come.

Get in touch

For more information on the issued raised in this article or to discuss your individual circumstances, please get in touch with your usual Crowe contact.

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Rebecca Durrant
Rebecca Durrant
Partner, National Head of Private Clients
Manchester