SUNAK’S SEVEN TOP TAX TARGETS

RISHI Sunak is expected to raise at least one tax in today’s Autumn Budget. The big question is, which one? Pensions, inheritances, capital gains and wealth are all in his sights, so which is most likely to rise and who will suffer?

Victoria Scholar, head of investment at Interactive International, said Mr Sunak has to balance the books after spending more than £108billion over the last 12 months, lifting total public sector net debt to £2.2trillion.

She said: “The Chancellor would love to cut taxes instead of raising them, but his hands are tied.”

Here are his top targets...

LIFETIME ALLOWANCE

THE highly punitive pensions lifetime allowance slaps a 55 per cent tax charge on pensions above £1,073,100.

Right now, 1.6 million are set to pay but millions more could get caught out if Mr Sunak cuts the allowance to £900,000, or even £800,000, as many anticipate.

Analyst Tom Selby said it adds yet another layer of “horrific complexity” to the pension system, which far outweighs the money raised.

Likelihood of a lifetime allowance tax raid: 3/5.

INHERITANCE TAX ON PENSIONS

PENSIONS can be passed on to loved ones free of inheritance tax on death, and changing that would raise billions.

Analyst Tom Selby added: “However, it would inevitably spark ‘death tax’ headlines– not something politicians would generally welcome.”

Likelihood of an inheritance tax on pensions raid: 2/5.

PENSIONS ANNUAL ALLOWANCE

RISHI Sunak may take the easy way out and target the amount you can invest in a pension each year, currently set at £40,000. Tom Selby, of AJ Bell, said. “Lowering the annual allowance to £30,000 or even £20,000 would raise revenue while only affecting those who make large pension contributions.”

Likelihood of a raid: 2/5.

PENSIONS TAX RELIEF

HM Revenue & Customs grants tax relief on pension contributions, at either 20, 40 or 45 per cent.

Every Budget there is speculation that this will be synchronised at 25 or 30 per cent for everybody.

Simon Goldthorpe, joint executive chairman of Beaufort Financial: “This could net the Chancellor an immediate multi-billion-pound windfall and would only affect higher earners.”

Likelihood of a pensions tax relief raid: 2/5.

CAPITAL GAINS TAX

THE number one tax target is likely to be capital gains tax, said AJ Bell analyst Tom Selby. “This is seen as a tax on the wealthy, and could be a popular move.”

You pay it when selling assets at a profit

– including shares and other investments held outside of a tax-free Isa, as well as paintings, antiques and jewellery and buy-to-let or holiday properties.

Mr Sunak could bring today’s complex CGT rates into line with income tax at either 20, 40 or 45 per cent, said Shaun Moore, tax and financial planning expert at Quilter. “This means most people will pay double.”

Likelihood of a CGT tax raid: 4/5.

INHERITANCE TAX

INCREASING inheritance tax (IHT) would be highly unpopular but Mr Sunak could use the need to simplify this complex tax as an excuse. The £175,000 main residence nil-rate band on family homes could be scrapped. Or the Chancellor could take a stealth approach by tightening rules on lifetime gifts and exemptions. Likelihood of an inheritance tax raid: 3/5.

WEALTH TAX

A WEALTH tax would be hugely unpopular with traditional Conservative voters, but could happen, said Tom Pugh, an economist at RSM.

He said: “A one-off charge on property-based assets could cut the deficit and address growing inequality.”

Any change is highly unlikely, Mr Pugh said, but the Chancellor may announce a consultation on such a tax.

Likelihood of a wealth tax raid: 1/5.