Incoming dividend tax raid

**Fraidycat** · 4 November 2022, 07:48

So potentially +1.25% on dividends. And reducing/scrapping the 2K allowance.

They will increase the dividend rates until they are inline with income tax rates. They are just doing it a few percent at a time.. Will take another 5 to 10 years to equalise them.

They don't seem to care we already pay 20+% corp tax beforehand.

**AtW** · 4 November 2022, 08:04

Nd they will surely increase CGT

**jamesbrown** · 4 November 2022, 09:01

Originally posted by Fraidycat View Post

So potentially +1.25% on dividends. And reducing/scrapping the 2K allowance.

They will increase the dividend rates until they are inline with income tax rates. They are just doing it a few percent at a time.. Will take another 5 to 10 years to equalise them.

They don't seem to care we already pay 20+% corp tax beforehand.

It will take until precisely Labour’s first budget in Spring 2025, given that it’s their stated policy.

**ladymuck** · 4 November 2022, 09:03

This was in the Torygraph yesterday.

https://www.telegraph.co.uk/business...ains-tax-raid/

Jeremy Hunt is preparing a raid on entrepreneurs, savers and landlords to help plug the £50bn hole in Britain’s public finances, The Telegraph can reveal.

The Chancellor is considering an increase in the headline rate of capital gains tax (CGT) and taxes on dividends at the Autumn Statement.

Mr Hunt is examining changes to the headline rate, reliefs and allowances on CGT while also considering hitting savers with an increase in dividend taxes. Officials are also working on a cut to the £2,000 tax-free dividend allowance.

The potential tax rises immediately sparked a backlash from business leaders who warned it would undermine enterprise and saving. Landlords have already faced a tightening squeeze on returns since the 2019 General Election.

However the Chancellor and Rishi Sunak have agreed that those with the “broadest shoulders” should bear the brunt of efforts to shore up the public finances, Treasury sources said.

Capital gains tax is levied on profits made from selling an investment, including shares and properties that are not the main home.

Treasury sources said sweeping changes to CGT, including to the headline rate, are being considered but cautioned that much can change before the Autumn Statement on 17 Nov, as the fiscal blackhole facing Mr Hunt shifts.

It is understood that reductions in capital gains tax reliefs and allowances are most likely to be given the green light, while officials have put an increase to the headline rate on the table given the scale of the fiscal shortfall. Mr Sunak previously considered increasing CGT to bring it in line with income taxes, a raid which would have raised an estimated £16bn.

CGT is expected to raise £15bn in 2022-23, or 1.5pc of all receipts. Currently rates vary from 10pc to 28pc depending on the type of asset and the income of the taxpayer.

The Treasury said it would not comment on speculation ahead of the Autumn Statement.

In a fortnight the new taxation and spending approach will be announced by Jeremy Hunt, the Chancellor, with discussions on-going with Number 10 and Whitehall departments.

But The Telegraph can reveal that, despite mortgage rates soaring and predictions of steep house price falls, Treasury officials are not planning any extra help for homeowners.

There will be no extension of the stamp duty cut adopted by Liz Truss, a Whitehall source has told The Telegraph, meaning no extra intervention targeted at propping up property prices.

Nor is the Treasury currently working on a new scheme to help people who face mortgage defaults, despite some calls for such a move from cost-of-living campaigners.

A Whitehall source said: “We have a fiscal hole north of £‎50bn. We have to cover that with spending cuts and tax rises to try to balance and books."

Mr Hunt and Rishi Sunak want to find the money equally between tax rises and spending cuts. The approach means that despite the economy already being in recession, according to the Bank of England, the Treasury is preparing to tighten fiscal policy.

On Thursday Mr Hunt acknowledged the hardships being faced: "Today's news is going to be very tough for families with mortgages up and down the country, for businesses with loans.

“But there is a global economic crisis, the International Monetary Fund says a third of the world's economy is now in recession.”

The Chancellor also defended his approach, saying: "The best thing the Government can do if we want to bring down these rises in interest rates is to show that we are bringing down our debt.

"Families up and down the country have to balance their accounts at home and we must do the same as a government."

Mr Hunt is looking at raising the dividend tax rate and a cut to the tax-free dividend allowance in a £1bn-a-year tax raid on pensioners, business owners and the self-employed.

Under the current rules no tax is paid on dividend income below £2,000 but Mr Hunt is said to be considering halving the allowance to £1,000 or even cutting it altogether.

Removing the allowance would raise £1bn for the Treasury each year, according to the Institute for Public Policy Research, a think tank.

Craig Beaumont, chief of external affairs at the FSB, said: “The rise as mooted is another deterrent to becoming an entrepreneur. Owner-managers who pay themselves through dividends were largely left out of pandemic-era income support schemes..

“Economic recovery will depend on entrepreneurship. Disincentivising this group in yet another way would be a short-sighted move from the new Chancellor, himself a former entrepreneur.”

Basic rate income taxpayers currently pay 8.75pc on dividends earned above the allowance, while higher rate payers pay 33.75pc and additional rate taxpayers the levy is 39.35pc.

If the dividend allowance is cut to £1,000, then a basic rate taxpayer will end up paying £87.50 more in tax, according to wealth manager Quilter.

This rises to £337.50 for higher-rate taxpayers and £393.50 for additional-rate payers.

Scrapping the allowance completely would see a basic-rate taxpayer charged £175 in tax on their dividends and would cost a higher-rate payer £675 and an additional-rate payer £787.

This comes a week after the IPPR published a paper in which it said the Government should scrap the £2,000 allowance in order to raise tax revenues.

The think tank also proposed bringing dividend tax in line with rates of income tax (20pc for basic-rate, 40pc for higher-rate and 45pc additional-rate). Combined with the removal of the allowance, the IPPR estimates this would generate £6bn for the Treasury every year.

George Dibb of the IPPR said: "Rumours that the Government is going to scrap the dividend tax allowance are welcome, but we think the Government should go further and start taxing dividends at the same rate as income tax. Not only would this raise billions more to help support households and businesses, it would also end the injustice that working people pay a higher tax on their income than shareholders."

Increasing capital gains tax would have echoes with the approach George Osborne adopted when the Conservative-Liberal Democrat Coalition took office in 2010.

The tax rate had already been increased from 10pc to 18pc in 2007 by Alistair Darling, the Labour chancellor at the time.

Mr Osborne in his first budget of the coalition government in June 2010 outlined a package of deep spending cuts and some tax rises in an attempt to balance the books in what would become known as the austerity drive.

Mr Osborne, the chancellor then, decided to increase capital gains tax, bringing in a new rate of 28pc for higher rate income taxpayers.

He explained at the time in his Budget speech that “my concern has been to balance the competing demands of fairness, simplicity and competitiveness”.

But as the economy grew and after the Tories won a surprise House of Commons majority at the 2015 general election Mr Osborne returned to the same tax, this time doing the opposite.

In his Budget of March 2016 Mr Osborne slashed the higher rate of capital gains tax from 28pc to 20pc and the basic rate cut from 18pc to 10pc.

In recent weeks Mr Hunt, the current Chancellor, has held talks with Mr Osborne about the approach he should adopt, offering a possible hint at why he is looking at the move.

**BigLadFromBeeston666** · 4 November 2022, 09:09

Originally posted by ladymuck View Post

This was in the Torygraph yesterday.

https://www.telegraph.co.uk/business...ains-tax-raid/

Jeremy Hunt is preparing a raid on entrepreneurs, savers and landlords to help plug the £50bn hole in Britain’s public finances, The Telegraph can reveal.

The Chancellor is considering an increase in the headline rate of capital gains tax (CGT) and taxes on dividends at the Autumn Statement.

Mr Hunt is examining changes to the headline rate, reliefs and allowances on CGT while also considering hitting savers with an increase in dividend taxes. Officials are also working on a cut to the £2,000 tax-free dividend allowance.

The potential tax rises immediately sparked a backlash from business leaders who warned it would undermine enterprise and saving. Landlords have already faced a tightening squeeze on returns since the 2019 General Election.

However the Chancellor and Rishi Sunak have agreed that those with the “broadest shoulders” should bear the brunt of efforts to shore up the public finances, Treasury sources said.

Capital gains tax is levied on profits made from selling an investment, including shares and properties that are not the main home.

Treasury sources said sweeping changes to CGT, including to the headline rate, are being considered but cautioned that much can change before the Autumn Statement on 17 Nov, as the fiscal blackhole facing Mr Hunt shifts.

It is understood that reductions in capital gains tax reliefs and allowances are most likely to be given the green light, while officials have put an increase to the headline rate on the table given the scale of the fiscal shortfall. Mr Sunak previously considered increasing CGT to bring it in line with income taxes, a raid which would have raised an estimated £16bn.

CGT is expected to raise £15bn in 2022-23, or 1.5pc of all receipts. Currently rates vary from 10pc to 28pc depending on the type of asset and the income of the taxpayer.

The Treasury said it would not comment on speculation ahead of the Autumn Statement.

In a fortnight the new taxation and spending approach will be announced by Jeremy Hunt, the Chancellor, with discussions on-going with Number 10 and Whitehall departments.

But The Telegraph can reveal that, despite mortgage rates soaring and predictions of steep house price falls, Treasury officials are not planning any extra help for homeowners.

There will be no extension of the stamp duty cut adopted by Liz Truss, a Whitehall source has told The Telegraph, meaning no extra intervention targeted at propping up property prices.

Nor is the Treasury currently working on a new scheme to help people who face mortgage defaults, despite some calls for such a move from cost-of-living campaigners.

A Whitehall source said: “We have a fiscal hole north of £‎50bn. We have to cover that with spending cuts and tax rises to try to balance and books."

Mr Hunt and Rishi Sunak want to find the money equally between tax rises and spending cuts. The approach means that despite the economy already being in recession, according to the Bank of England, the Treasury is preparing to tighten fiscal policy.

On Thursday Mr Hunt acknowledged the hardships being faced: "Today's news is going to be very tough for families with mortgages up and down the country, for businesses with loans.

“But there is a global economic crisis, the International Monetary Fund says a third of the world's economy is now in recession.”

The Chancellor also defended his approach, saying: "The best thing the Government can do if we want to bring down these rises in interest rates is to show that we are bringing down our debt.

"Families up and down the country have to balance their accounts at home and we must do the same as a government."

Mr Hunt is looking at raising the dividend tax rate and a cut to the tax-free dividend allowance in a £1bn-a-year tax raid on pensioners, business owners and the self-employed.

Under the current rules no tax is paid on dividend income below £2,000 but Mr Hunt is said to be considering halving the allowance to £1,000 or even cutting it altogether.

Removing the allowance would raise £1bn for the Treasury each year, according to the Institute for Public Policy Research, a think tank.

Craig Beaumont, chief of external affairs at the FSB, said: “The rise as mooted is another deterrent to becoming an entrepreneur. Owner-managers who pay themselves through dividends were largely left out of pandemic-era income support schemes..

“Economic recovery will depend on entrepreneurship. Disincentivising this group in yet another way would be a short-sighted move from the new Chancellor, himself a former entrepreneur.”

Basic rate income taxpayers currently pay 8.75pc on dividends earned above the allowance, while higher rate payers pay 33.75pc and additional rate taxpayers the levy is 39.35pc.

If the dividend allowance is cut to £1,000, then a basic rate taxpayer will end up paying £87.50 more in tax, according to wealth manager Quilter.

This rises to £337.50 for higher-rate taxpayers and £393.50 for additional-rate payers.

Scrapping the allowance completely would see a basic-rate taxpayer charged £175 in tax on their dividends and would cost a higher-rate payer £675 and an additional-rate payer £787.

This comes a week after the IPPR published a paper in which it said the Government should scrap the £2,000 allowance in order to raise tax revenues.

The think tank also proposed bringing dividend tax in line with rates of income tax (20pc for basic-rate, 40pc for higher-rate and 45pc additional-rate). Combined with the removal of the allowance, the IPPR estimates this would generate £6bn for the Treasury every year.

George Dibb of the IPPR said: "Rumours that the Government is going to scrap the dividend tax allowance are welcome, but we think the Government should go further and start taxing dividends at the same rate as income tax. Not only would this raise billions more to help support households and businesses, it would also end the injustice that working people pay a higher tax on their income than shareholders."

Increasing capital gains tax would have echoes with the approach George Osborne adopted when the Conservative-Liberal Democrat Coalition took office in 2010.

The tax rate had already been increased from 10pc to 18pc in 2007 by Alistair Darling, the Labour chancellor at the time.

Mr Osborne in his first budget of the coalition government in June 2010 outlined a package of deep spending cuts and some tax rises in an attempt to balance the books in what would become known as the austerity drive.

Mr Osborne, the chancellor then, decided to increase capital gains tax, bringing in a new rate of 28pc for higher rate income taxpayers.

He explained at the time in his Budget speech that “my concern has been to balance the competing demands of fairness, simplicity and competitiveness”.

But as the economy grew and after the Tories won a surprise House of Commons majority at the 2015 general election Mr Osborne returned to the same tax, this time doing the opposite.

In his Budget of March 2016 Mr Osborne slashed the higher rate of capital gains tax from 28pc to 20pc and the basic rate cut from 18pc to 10pc.

In recent weeks Mr Hunt, the current Chancellor, has held talks with Mr Osborne about the approach he should adopt, offering a possible hint at why he is looking at the move.

Thank you for sharing. Sobering stuff.

**SueEllen** · 4 November 2022, 09:24

But Corbyn...

**AtW** · 4 November 2022, 09:42

I can see Labour pushing even higher taxes for “unearned” income

What irritates me most us that nobody in newspapers even mentions that “dividend allowance” was introduced as small pathetic replacement for removal of dividend tax credit, argument was that majority of people won’t even pay dividend tax so all is good - it was since cut down from 5k already

**Lance** · 4 November 2022, 09:49

"RAID" implies a one off hit.
This isn't anything like as generous as a raid. It's simply a tax rise.

We are going to get Corbyn fiscal policy, and austerity at the same time...

Time for a revolution..... (and rejoin the EU).

**WTFH** · 4 November 2022, 09:54

And no plans to touch off-shore, as that would hit too many of the owners of the media that support them, and their own party.

Incoming dividend tax raid