“This move was mooted by the Office for Tax Simplification in a previous review. The stipulation from the OTS was that investors should get some sort of inflationary relief, so they are only taxed on above-inflation gains. Clearly any relief would reduce the tax-take for the government, so that may be quietly ignored in any final rules.”
In a less radical move, Suter said the government could cut the tax-free allowance from its current £12,300.
“The allowance has already been frozen until 2026, but Rishi Sunak could go one step further and cut the allowance. Chopping it in half, to £6,000, would generate £480mn, while cutting it to £2,500 would give an £835mn boost to government coffers, according to OTS predictions.”
Meanwhile, Andy Butcher, branch principal & chartered financial planner at Raymond James, said corporation tax is scheduled to increase by 6 per cent next year, but the conservative party will consciously be looking for tax cuts prior to the 2024 election, or after a leadership change, to restore their lead in the polls.
“Although Wednesday’s statement may be coming too soon for such a move, it is likely that in upcoming announcements they will roll back the increase by a few percentage points,” he said.
“This reduction would be sold as a tax cut, even if it in fact represented a tax rise from 19 per cent.”
Energy bills and petrol prices
The government has already come under mounting pressure to do something about the escalating cost of energy.
The chancellor announced some targeted support to help ease household finances, such as the £200 energy rebate initiative.
However, Myron Jobson, senior personal finance campaigner at Interactive Investor, said this rebate is not going to cut it for many low-income households facing the stark choice of eating or heating their home.
“The rebate and clawback arrangement means that UK consumers will be stuck with higher energy bills for a longer period of time,” he said.
“It can also lead to some bizarre outcomes. People who lived together but moved out to live in separate accommodation would go from sharing the £40 a month repayment requirement under one dwelling to having to each foot the cost entirely in their respective accommodation.”
He argued that the government might need to go back to the drawing board and offer a solution or solutions that offer instant relief for those struggling with energy bills.
“The chancellor could also consider scrapping environmental levies on domestic fuel bills to support Britons amid rising energy bills," he said.
Additionally, Suter said another option that might appeal to the government is to extend the £200 energy bill loan scheme.
