Mr Sunak admitted to recently-elected Conservative MPs and other back-benchers that there will be “short-term challenges” to recoup some of the costs incurred by both the Self-Employment Income Support Scheme (SEISS) and the Coronavirus Job Retention Scheme.
It’s been reported that officials within HM Treasury are considering a string of tax rises to plug the widening gaps in the public finances.
A reformation of capital gains tax was thought to be one measure under consideration, with taxes on capital profits potentially set at the same levels as income tax, up to 20% for basic-rate taxpayers and sales of second properties.
Business groups have also been fearing a potential rise in corporation tax from 19% to 24%, which could recoup up to £12bn in one fell swoop.
Cuts to pensions tax relief may also be considered, given that HM Revenue and Customs (HMRC) estimates that this relief cost the Exchequer £21.2bn in missed revenue in 2019 alone. Setting this relief at 20% would earn an additional £10bn for the Treasury.
The self-employed community may also be under the microscope. It’s possible that Mr Sunak will look to bring self-employed Class 4 National Insurance Contributions (NICs) up from 9% to 12% in line with PAYE employees.
Subsequently, a typical self-employed professional earning £42,000 would have to pay an additional £500 a year in their self-assessment tax return.
Although the Government has refuted many of these claims as “speculation”, the Chancellor intimated that tax rises were possible, at least for the short-term.
The soonest that the Chancellor will be able to implement possible tax rises is the Autumn Budget in November. If you want to be kept abreast of all the main talking points from the upcoming Budget which is expected in November, make sure you sign up for our budget reports, delivered straight to your inbox.
Last updated: 7th October 2020