The Treasury is reportedly considering a number of tax increases in a number of areas to help deal with the economic impact of COVID-19. Largely, these reported changes target UK companies and the wealthier members of society.
The key changes being considered are as follows:
- Corporation tax: It is reported that corporation tax could rise from 19% to 24%.
- Capital Gains Tax (CGT): It is reported that CGT (which is currently charged at a top rate of 28%) could in some instances be levied at the same rate as income tax (which is charged at up to 45%). If implemented, this could mean that for higher and additional rate taxpayers, tax payable on the sale of second homes or buy to let properties could rise from 28% to as high as 45%.
- Dividend tax rates: Tax on dividends may also be increased in line with normal income tax.
- Pensions tax relief: Pensions tax relief could be reduced for higher rate taxpayers.
There has been no official statement from the Government to date. So the various reports have not been formally confirmed by the Treasury at the time of writing.
Any tax planning made with these possible changes in mind should be carefully considered, though noting that such changes (if implemented) may become effective retrospectively.