Robert Pullen, tax partner: "It's clear that any tax rises are unlikely to be dramatic or highly publicised, mainly due to the political fall-out that would inevitably follow. There has been talk of wheeling out the tried and tested 'stealth tax' – by freezing tax bands and allowances and letting inflation do the rest to drag more taxpayers into higher rates. However, recent projections released indicate this stealth tax, combined with some extra borrowing, would still leave £11bn unfunded."
One previously mooted suggestion is to increase the main rates or income tax, NIC and VAT. However Robert thought this would be unlikely, given how hugely unpopular it would prove.
He added: "Some of the tax reliefs less in the spot-light could be at risk. There are a number of reliefs available to encourage behaviour the Government sees as positive. An example of this is relief for investors into new start-up trading companies, which may otherwise struggle to raise funds from a mainstream bank. Many would argue these reliefs are critical for encouraging new businesses, and hence employment, but Hammond may consider the political fall-out worth it, when considering the alternatives."
“A more audacious and obvious target could be a 'one-off' raid on something like ISA's, pensions, or even main residence relief. This would cause a huge rupture however, as it could hit traditional Conservative voters more than most.”
Pullen said: "Tax relief for ISAs costs the Treasury around £2.9bn/year, pension’s relief £24bn/year and main home relief £27.8bn/year. The Budget on 29 October might be fascinating, or it could be another flop like last year."
“Additionally, Philip Hammond has left the door open for tax rises.”
For more information, please contact Robert Pullen at robert.pullen@blickrothenberg.com