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Chancellor Rachel Reeves may not be the most popular person in the UK later this week, but to her credit she has always been clear about what she believes this country needs.
During his time in the opposition, he wrote countless columns criticizing the Government and promoting his own agenda. To get a sense of what might be coming in your first budget, Wealth & Personal Finance has combed through these articles to unearth the policies you’ve fiercely defended (and those you’ve openly despised).
Chancellor Rachel Reeves
The housing inheritance subsidy could disappear
It is no secret that Mrs Reeves believes inheritance taxes are too generous, and is expected to announce a tightening of inheritance taxes.
Writing for The Guardian in 2017, he took aim at former chancellor George Osborne’s plan to increase inheritance tax relief from £325,000 to £500,000 per person to allow a £1 million family home to be transferred tax-free. He called it “wicked” and “ill-conceived,” as well as calling it a “tax break for the wealthy elite.”
Therefore, the current allocation for the transfer of assets could well be in danger of extinction.
Andrew Marr, managing partner at tax specialist Forbes Dawson, suspects this allocation is “an obvious choice” given that most people sell the homes they inherit rather than live in them.
Currently, you can pass on up to £325,000 after your death free of inheritance tax, and married or civil partnership couples can pass on £650,000. Anything over this allowance is taxed at a flat rate of 40 per cent. Those who leave a property to a direct descendant get an additional allowance of £175,000 each, known as the nil residence rate band, meaning £500,000 is tax-free.
Therefore, a married or civil partnership couple can pass on a family home worth up to £1 million free of inheritance tax. If property allowance is removed on Wednesday, loved ones would face a £140,000 tax bill.
Your ISA may have a limit
The tax-free individual savings account (Isa) could come under fire if Reeves acts on his vision of a lifetime limit on tax-free accounts.
In an article published in The Independent eight years ago, he called for a £500,000 limit on the amount savers could deposit into Isas.
Savers and investors can pay up to £20,000 into Isas each tax year, where they grow free of tax on interest, capital gains or dividends. This annual allowance can be split between different types of Isa, including cash Isas, as well as stocks and shares Isas.
But any changes could discourage investors and cause uproar among the 40,000 people who currently have more than £500,000 in Isas.
That £500,000 limit would be exceeded if an investor invested just half their current annual allowance into an Isa each year for 25 years, assuming it grows just 5 per cent a year, according to calculations by Hargreaves Lansdown.
There are also fears that the Chancellor could restrict the annual allocation.
When Reeves wrote about Isas in January 2016, the limit was £15,000 a year, and he suggested it should be maintained.
Use the property tax to finance social assistance
Social care funding was in the spotlight this summer when the Chancellor scrapped plans to set a cap of £86,000 on what anyone would have to pay in their lifetime for personal care. But he could be planning to fund it by imposing a new charge on landlords and investors, if a previous article he wrote for The Mirror is acted upon.
The 2021 article criticized the Conservatives’ “unfair” jobs tax – an initial 1.25 percentage point increase in National Insurance contributions to fund social care. Instead, he said, there were other ways to raise this money, including taxing the income of owners and “those who buy and sell large amounts of financial assets, stocks and shares.”
It is unclear whether Reeves was suggesting the funding should be raised through an increase in direct taxes on property owners or an increase in capital gains tax rates. Experts warn that a capital gains tax increase is one of the most likely changes brewing this week.
Pension tax reduction for higher earners
Ms Reeves has long called for a flat rate for tax relief paid on pensions; Workers currently receive tax relief based on their income tax rate.
The Chancellor was said to be seriously considering a review of the system but was forced to scrap it after being warned it would affect up to a million teachers, nurses and other public sector workers.
In an article for The Times in 2016, he wrote that then-Chancellor Osborne should set a flat rate of pension tax reduction.
‘It would be simpler, fairer and an important step towards boosting retirement savings. Figures of between 20 and 33 percent have been proposed for this type. “I think it should be 33 percent,” he said.
Charlene Young, pensions expert at investment platform AJ Bell, explains that if a 33 per cent rate was introduced for everyone, savers who get tax relief at the basic rate of 20 per cent would receive a boost. However, it would mean an additional impact on higher earners, who would lose a significant portion of their tax relief.
Pension tax relief could be under even greater threat if the Chancellor goes further and follows her previous calls to replace it entirely.
Writing for The Independent in 2016, Ms Reeves called for a “simple savings bond” where for every £1 you “contribute” you would receive 25 or 30p back from the public purse. She said if you saved £1,000 a year you could get £250 or £300 on top. This would come with annual and lifetime limits on how much you could save.
Although a spokesman for Ms Reeves said Labor had “no plans” to change the pension tax cut during the election campaign, she refused to rule out any future changes.
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