The now former Chancellor Sajid Javid was said to be considering a raid on higher earners via pension tax relief and possibly a “mansion” tax in the 11 March Budget; in a bid to ease the pressure on strained public funding and to be able to claim the Government is taking steps to reward new Conservative voters in deprived areas. It remains to be seen if the new Chancellor will follow suit.
The current system of pension reliefs costs the Treasury around £40 billion a year and mainly benefits wealthier people, as workers who save into a pension receive tax relief at the same rate as their income.
However, Mr Javid was considering cutting the rate, from 40 per cent to 20 per cent, which would raise more than £10 billion annually for the Treasury and currently, around 65 per cent of pension tax relief goes to just 17 per cent of the population.
Other options to raise more cash for the NHS and other commitments to boost spending on public services include abandoning including the plan to cut corporation tax cut from 19 per cent to 17 per cent.
One idea apparently being discussed at the highest levels is an added council tax band for even more expensive properties than those currently in the H band, although it is likely that any effort to target the owners of expensive homes would face strong resistance.
However, the Treasury has declined to comment on the possible tax changes, as reported by the Financial Times, which suggested that a consultation could be outlined in the Budget.
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