🌹 Labour’s Budget Plans – Rumours – DAY 4 🌹

Continuing our daily discussion of the potential changes introduced by the Labour Budget, today we’re looking at more taxes.

• Introduction of a separate wealth tax – say 1% or 2% per annum of your net asset value, or maybe a one-off tax of 2% or 5% to raise tax revenue as a one-off.

Our Comment:

• This would be a game changer and has had all sorts of unintended consequences where it has been introduced elsewhere.
• All sort of issues around how would you value assets, and how would the values be verified? So costly to administer.
• Liquidity to pay the tax – how many older people live in valuable big houses but do not have much cash to pay the tax?
• Chance of happening – ultimately unlikely.

• Labour have stated the main rate will remain at 25%, but could this mean the abolition of the small profits rate of 19% or that marginal relief may change?

Our Comment:

• Probably lower down on the list of priorities, and chance of happening – unlikely.

• Looking at changing this from 8.75% at basic rate, 33.75% for higher rate and 39.35% for additional rate payers, and making it equal to income tax rates – 20%, 40% and 45%.
• Or some form of NI on dividend payments?

Our Comment:

• Wouldn’t be nice and further erodes the benefits in setting up a company (which as we know increases your risk vs. taking an employed job).
• NI on dividends would be more complex, with unintended consequences.
• Probably lower down on the list of priorities, and chance of happening – possible but unlikely at this stage.

This post represents just one part of the potential changes the Labour Budget may introduce and our opinions. To download a PDF containing our full thoughts, please follow the below link.