Wealth tax prospects and practicalities discussed by expert
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Raising Capital Gains Tax (CGT) or National Insurance contributions (NICs) could do more harm than good when it comes to boosting Britain’s economy after the COVID-19 pandemic, experts have warned.
As Mr Sunak makes his final preparations ready for his Autumn budget next week more economic changes are about to be announced.
There have been rumours that Capital Gains Tax may be brought inline with Income Tax as one way to raise money.
It’s also possible that he could align National Insurance contributions for the self-employed with employee rates.
It’s also possible that he could align NIC for the self-employed with employee rates.
However, economists are worried that attacking wealth taxes would hurt British businesses and the self-employed who have already had an extremely tough 18 months.
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In an open letter to the Chancellor of the Exchequer, Julia Rosenbloom, tax partner at accountancy company Smith & Williamson urged Rishi Sunak to leave wealth taxes alone.
She said now is not the time to penalise entrepreneurs or the self-employed, who are the lifeblood of the economy.
This would mean not increasing Capital Gains Tax or National Insurance Contributions (NICs).
“Entrepreneurs and business owners up and down the country are the lifeblood of our economy and need to be supported,” Ms Rosenbloom said. “They help bring economic growth, invest in local communities and create jobs.”
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British business owners have already faced significant challenges during the pandemic, and many are still suffering financially as a result.
She urged: “Please don’t increase Capital Gains Tax because if it gets too close to income rates then there will be less of an incentive for entrepreneurs to take the risks we need for a healthy, growing economy.”
And, as well as begging him to leave CGT alone, she also urged him to consider how an increase in National Insurance contributions could damage the self-employed.
She continued: “Please don’t align National Insurance Contributions (NIC) for the self-employed with employee rates.
“Many self-employed have already had a tough time during the pandemic and have not been able to access support schemes like furlough to the same extent as employed individuals.
“Any further changes here could make some businesses unviable.”
The letter comes after others have expressed concern that Capital Gains Tax could be an “easy target” in the Chancellor’s Autumn budget.
Capital Gains Tax is a levy charged on the profit a person makes when they sell or gift something which has increased in value, usually a property.
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Britons have a tax-free allowance which currently stands at £12,300, or £6,150 for trusts.
If a person’s taxable gains are above their CGT allowance, they have to report this and pay the tax they owe.
National Insurance contributions are paid by both employees and businesses and economists fear that raising self employed contributions inline with employees could be the final nail in the coffin.
The Chancellor’s Autumn budget is due to be announced on October 27.
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