No final decisions have been made, but Whitehall sources said options were being considered by the Treasury’s high-net-worth individuals policy group. The changes could include reducing the time period in which high net worth individuals can avoid tax on their worldwide income. Experts suggest cutting the term from 15 to five years could raise an extra £1.6bn a year. The chancellor, Jeremy Hunt, is also considering reducing the tax-free threshold for shareholder earnings from dividends from its current level of £2,000 – although a more ambitious move would be to increase the rate of tax paid at the three thresholds, the highest of which is just under 40%. He has previously said that the guiding principle will be that “those with the broadest shoulders should be called upon to carry the heaviest burden.” Hunt has also been asked to consider changes to the capital gains tax, which has the potential to bring in billions if changed to match income tax rates. Such a change was the Office of Tax Simplification’s top recommendation in 2020, but was rejected by Rishi Sunak last year. The chancellor plans to submit the basic drafts of the statement for review to the Office for Budget Responsibility by the end of this week so they can start incorporating them into their forecasts. Any move on non-residents would be politically risky for Sunak, whose wife, Aksatha Murthy, is a non-resident. In April, Murthy agreed to pay tax on all global income going forward, though not retrospectively. Murty previously paid £30,000 a year for the status, which means she pays no UK tax on her overseas income. Under current rules, the status would automatically end once he had been in Britain for 15 years. The change has long been feared by Labour, which has said it would scrap the loophole entirely, using any extra revenue from it to fund some of its own proposed spending commitments. The shadow chancellor, Rachel Reeves, said scrapping tax relief entirely would raise £3.2bn a year and Labor would use those funds to pay for expanding the NHS workforce. However, the party would also need a proposal for a new status for temporary residents, which could be from six months to five years. Sunak and Hunt are said to have agreed that the tax caps will be frozen until 2028, two years longer than previously announced. It would raise money from millions as inflation pushes more people into higher tax brackets or paying taxes for the first time. It is expected to raise £5bn a year but has been labeled a “secrecy tax”. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. One of the biggest targets for tax increases is likely to be oil and gas companies. with a strengthened windfall tax to 30% from 25% and an extension of the tax for another three years to 2028, with a possible extension to cover electricity producers. This is another policy that Labor has been calling for – and it would leave the opposition with even less room to maneuver with its own spending plans. In several key areas of contention, there has been no final decision, according to Treasury sources. Two areas that could deliver big savings for the Treasury are changes to benefit increases and the pension triple lock, which Hunt said were on the table, although he and Sunak said they would prioritize to the most vulnerable. Tory MPs have already made clear their hostility to changes to the triple lock, or linking benefits to wages rather than inflation, when Sunak had previously promised the latter. The other key area is public sector pay, which could be broadly limited to just 2% pay rises in 2023-24, according to the Times. However, the limited increase is likely to fuel discontent in a sector already experiencing multiple strikes or looming elections.
