UK Government Might Soon Impose Higher Taxes On The Wealthy
10 Feb 2020
Approx Reading time: 3 minutes
- A new mansion tax may be imposed, asking owners of expensive properties to pay a tax.
- Another tax increase may come in the form of a reduction in relief provided as part of the pension tax, which has been abused by high-income earners to avoid paying tax.
There have been multiple reports suggesting that a tax hike is in the pipeline which would primarily impact wealthy homeowners as well as those commanding some of the highest paychecks in Britain.
According to reports, this could include a new tax that would be imposed on homeowners having some of the most expensive properties in the country. In addition to this mansion tax, the government is also reportedly contemplating cutting down tax relief that is currently enjoyed by those workers who have a high salary. Also, increases in taxes imposed on inheritance as well as capital gains are also expected, as per reports.
By increasing taxes, Boris Johnson, the British Prime Minister, could be sending a very clear message to his largely conservative voter base, that the focus is on increased public spending by imposing higher taxes on the wealthy. However, this is in stark opposition to the historically low-tax approach of the conservatives and hence has stirred up controversy among conservatives around the country.
In fact, Johnson himself would’ve opposed such a move had it occurred back in 2014. That year, a home levy had been planned by Ed Miliband, the leader of the Labour party, which Johnson had called a tax that was being imposed on London. Johnson had said that the levy, which promised to bring over £2 million, would be extremely unpopular due to the already increasing prices of properties in the city.
Even the Labour party has been against a mansion tax in the past. John McDonnell, who represents London and is part of Labour, stood in opposition
to such a tax back in 2017.
So far, no details have been revealed about the particular shape and form such taxes would assume, if at all. Reports have only revealed that top government officials are now deliberating the idea of higher taxes on the rich. Nothing has been officially decided yet, and any changes might only be revealed as part of the budget statement to be presented by chancellor Sajid Javid on 11th March.
For those earning a high income, the relief applicable to pension tax might be cut. This would result in a higher tax on private pension contributions for all those workers who have an annual wage of over £46,350. This move could contribute over £10 billion more per year to the UK Treasury, as per experts
According to experts, the relief by the government on pension tax was meant to encourage greater contribution by workers towards their retirement fund. However, most of these benefits were being enjoyed by those belonging to the high-income bracket, as they redirected more income to avoid paying taxes. Statistically, 11.7% of all taxpayers end up enjoying over 50% of all tax benefits being provided by the government.