In the wake of Sir Keir Starmer’s keynote speech in Downing Street, wealthy households and businesses across the UK are preparing for potential tax increases as the government aims to address a £22bn shortfall in public finances. Starmer’s strong indication that those with “the broadest shoulders” will bear the heavier burden has left many wondering what the upcoming Budget in October might entail.
Business groups, such as the CBI and the Institute of Directors, have called on the government to provide stability and certainty for businesses and entrepreneurs. They have urged the Treasury to refrain from introducing sector-specific windfall taxes or increasing national insurance contributions paid by employers, emphasising the need for well-considered, long-term tax policies that promote growth and investment.
Despite the government’s pledge not to increase the 25 per cent corporation tax rate, experts suggest that businesses and wealthy taxpayers may still be targeted, given Chancellor Rachel Reeves’s decision to rule out rises in income tax, VAT, and national insurance. Potential targets could include banks, which have benefited from higher interest rates, or an increase in the 19 per cent corporation tax rate applied to small profits.
The Institute for Public Policy Research, a left-leaning think-tank, has advocated for raising taxes on dividends and share buybacks, while some analysts have suggested equalising capital gains tax rates with income tax rates. Pensions have also been identified as a potential area for tax reforms, although any changes would likely be highly contentious.
As the Budget approaches, Britain’s richest taxpayers are already taking steps to redraw their tax affairs in anticipation of potential increases in capital gains and inheritance taxes. The uncertainty surrounding the upcoming fiscal event has left many businesses and high-net-worth individuals bracing for the impact of tax rises, as the government seeks to address the significant gap in public finances.
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