Chancellor Jeremy Hunt to launch £13bn raid on UK PLC

The chancellor was urged yesterday not to tax businesses ‘in the ground’ as he considers another raid that could cost businesses and entrepreneurs tens of billions of pounds.

Jeremy Hunt looks for ways to plug a £50 billion black hole in public finances.

The latest ideas put forward include changes to the capital gains tax (CGT) that could bring in as much as £9 billion, as well as a shakeup of the dividend tax that could bring in an additional £2 billion.

There may also be pressure on the banks that could bring in £1.8bn. No policy has been confirmed by the government.

But they would add to the burden caused by the corporate tax rate, which is already rising from 19 percent to 25 percent in April.

Business leaders have warned that new tax raids could stifle growth at a time when companies are already battling rising energy costs, higher interest rates and a looming recession.

Tax experts also warned that steep hikes could backfire by forcing asset owners to flee the country or taking other measures to avoid the additional costs.

Tina McKenzie, policy chair at the Federation of Small Businesses, said: “Filling the public finance gap cannot and should not be achieved at the cost of taxing small businesses and the self-employed, especially at a time when they face so many other headwinds. .

“It is a false economy to kill any chance of recovery and growth until the middle of the decade.”

Roger Barker, director of policy at the Institute of Directors, added: “Business confidence is already at a low ebb, and further straining corporations through higher corporate taxes would do little to reinvigorate a more positive business outlook.”

Raising corporate taxes to 25 percent looks set to raise the Treasury by £12.4 billion as early as 2023-24.

But more tax hikes and spending cuts are needed to close the UK’s gaping budget deficit. Raising the CGT rate could make a big dent.

The tax is levied on gains made from the sale of investments, including stocks, and non-main residence property.

Currently, rates range between 10 percent and 28 percent, depending on the type of assets being sold and taxpayers’ income.

It has previously been suggested that these should be closer to income tax rates, which are much higher.

However, accountants from business advisory group Azets think such a sharp rise could mean that the wealthy minority that pays the most in CGT is making an effort to avoid it.

They estimate that after an increase, the tax could bring in £23 billion in 2023-24 – an additional £9 billion.

Chris Sanger, head of tax policy at accounting giant EY, said this needs to be weighed against tax credits for those selling their businesses to avoid the risk that ‘entrepreneurs would rather leave the UK than stay to become business angel investors’. Meanwhile, an announced 1.25 percent dividend tax hike could bring in £1.34 billion. But it can hurt entrepreneurs who pay themselves through dividends.

In addition, halving the level of tax-free dividends, currently £2,000, would yield an additional £660 million, according to Azets.

Banks could come under pressure if an 8 percent mark-up on their profits, on top of the 19 percent corporate tax rate, continues.

That would mean that when corporate taxes rise in April, the overall rate for banks would rise to 33 percent, bringing in an estimated £1.8bn extra, but making London’s tax environment less attractive to financiers than rival cities like Frankfurt. , Amsterdam and New York .

A spokesperson for the financial services industry association, UK Finance, said: ‘We urge the government to consider the surcharge very carefully and not to jeopardize the competitiveness of the UK banking and financial sector.’

Other plans for Hunt’s tax statement on November 17 include an increased windfall tax on energy companies that could raise £40 billion in five years.