The Chancellor considers the tax raid of the middle class to pay off the mountainous COVID debt | UK News

The capital gains tax could be increased to help pay off billions of pounds that have been borrowed to support the economy during the COVID-19 pandemic.

A report commissioned by Chancellor Rishi Sunak said the Treasury could raise £ 14 billion by increasing rates of capital gains tax to bring it into line with income tax.

A capital gains tax is applied to profits from the sale or disposal of stocks and other property, such as a second home, with an annual allowance of £ 12,300.

The Office for Tax Simplification Report recommended that the government consider reducing the £ 12,300 to between £ 2,000 and £ 4,000.

Doing so and doubling the rates (currently 10% for base taxpayers and 20% for higher rate taxpayers) could encourage people to change their financial behavior, the report said.

“If the government considers the priority of simplification to be to reduce distortions in behavior, it should consider either aligning capital gains tax rates with income tax rates, or addressing the boundary issues between capital gains taxation and income tax,” said Bill Dodwell, OTS’s tax director.

Only 0.5% of the population paid a capital gains tax in 2017-2018. About 265,000 people gave £ 8.3 billion to the Treasury, while 60% (31.2 million people) paid £ 180 billion in income tax.

The The national debt exceeded 2 trillion pounds For the first time in July, the economy collapsed under the effects of the Coronavirus pandemic and the cost of supporting businesses and workers.

At the time, Mr. Sunak warned that “tough decisions” should be taken.

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The review took place in July, but the Treasury Department is under no obligation to follow the recommendations.

This comes after another report indicated that people earning more than 19,500 pounds a year should do so. Pay more in income tax to help boost public finances.

Resolution (Health and Social Care Tax) – a 4% tax on all earnings over £ 12,500 – which will be offset by a 3% reduction in National Employee Insurance and the abolition of Class 2 National Insurance contributions for the self – recommended that works.

She said the shift would not penalize the people hardest hit by the restrictions of the virus crisis – the low-wage earners and the self-employed – but it would raise £ 17 billion annually. He suggested allocating 6 billion pounds of this amount for social care.

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