All eyes on the iron Chancellor, what plans does Rachel Reeves have up her sleeve?
Investors and advisers now claim to be sweating on Labour’s potential tax hikes, something the party denied throughout the election campaign.
Investigative researcher Dan Niedle of Tax Policy Associates said this morning (5 July) that changing the tax system is a chance to fix elements which stand in the way of growth, which can also be “desperately unfair” and has urged a massive “clampdown on cowboys”.
“That amazing figure that 1/3 of all small business corporation tax isn’t being paid, almost £10bn/year? I think a lot of it isn’t real small businesses – it’s “umbrella company” tax avoidance and tax evasion, and schemes involving people like (Doug) Barrowman and (Paul) Baxendale-Walker. We’re talking huge sums of money being essentially stolen from taxpayers.”
Gary Smith, Partner in Financial Planning at wealth management firm Evelyn Partners, warned against raising capital gains tax rates: “Higher CGT rates tend to distort, and in some cases deter, investment as investors either hold onto unprofitable assets, or dispose of profitable ones, in response to changing rates of taxation.”
He said his firm has had the most enquiries from clients, and some who are most concerned about a possible CGT hike have been looking to dispose of assets.
Adrian Young, a tax partner at independent accounting and business advisory firm HURST, said: “Overall, the key election pledge from Labour was to not raise taxes for ‘working people’.”
Describing this pledge as “deliberately vague” Young says he expects to see Labour’s tax plans “gradually coalesce” over the summer months in the build-up to an early autumn budget.
“It remains to be seen whether Reeves delivers on her promises of a lighter-touch growth platform or whether, as Rishi Sunak the outgoing prime minister repeated, Labour reverts to type with a tax-and-spend agenda.”
