Mr Sunak set out his Budget o Wednesday as the UK economy looks to recover from the coronavirus crisis and economic turmoil. The country’s public sector debt has exceeded £2.1trillion and the Government’s COVID-19 bill has surpassed £400billion. A key announcement came regarding pensions, as the lifetime allowance will be frozen. The current limit of £1,073,100 will remain in place until 2024, capping how much savers can put in without accruing tax bills.
It was due to rise by 0.5 percent in the new tax year and would have been some £76,000 higher by 2025 before the freeze, based on the Office for Budget Responsibility’s inflation forecasts.
While tax hikes were largely put on hold, Steven Cameron, pensions director at Aegon, tells Express.co.uk that wealth taxes could be in the “firing line” as Mr Sunak considers reforms.
Mr Cameron said: “Wealth taxes could be put in the firing line because if Rishi Sunak wants to be seen as making the wealthy pay, you might increase wealth taxes or reduce exemptions.
“Capital gains tax is one and inheritance tax could be another.”
Mr Cameron believes that, as the Government seeks to overhaul social care, wealth tax changes could be considered.
He continued: “There’s a myriad of things he could do to do this. I see this as linked to the other big challenge the Government has with social care funding.
“The Government, when it was elected, promised it would come up with a new deal on social care funding, but they haven’t done that.
“We are living longer as a generation, and many of us will need social care later in life – and that needs to be paid for.
“Any new deal would need to say ‘here’s where the Government will pay, but here is where you will pay according to your wealth.
“I would expect to see wealth taxes reviewed alongside social care funding.”
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“Sunak did say that it is too early to make detailed fiscal policy announcements. We still don’t know the full costs of furlough and other support schemes. We still don’t know the full impact on the economy.
“I do expect he will be making further changes which could be of a detailed and wide-ranging nature. We shouldn’t assume that because he didn’t announce things yesterday, he won’t be thinking about them as longer term measures.
“We have got a manifesto commitment on the pension triple lock and tax triple lock, with all of these locks he’s got more locks than Houdini to grapple with.
“At some point, the Government might decide we have to be open with the public and say, ‘If we stick with these manifesto commitment we will have too many restrictions to do what is right to do.’
“He’s not done it so far, but in future there may come a time when he has to level with the public.”