Proposed Tax Increases Target High Earners, Savers, and Investors
Deputy Prime Minister Angela Rayner has written to Chancellor Rachel Reeves, outlining proposals for a series of tax changes aimed at higher earners and wealthier individuals. The letter includes eight suggested measures that, if implemented, could raise between £3 billion and £4 billion annually.
Key proposals include:
- Freezing the additional rate income tax threshold, bringing more individuals into the 45% tax band over time.
- Ending inheritance tax relief on shares held in the Alternative Investment Market (AIM).
- Closing the stamp duty loophole used in some commercial property transactions.
- Reinstating the pensions lifetime allowance, which was scrapped earlier in 2023.
- Increasing dividend tax rates to align more closely with income tax bands.
- Removing the tax-free dividend allowance, which currently stands at £500 for the 2024/25 tax year.
The memo accompanying the proposals states the changes would be “popular, prudent, and would not raise taxes on working people.”
However, the plans have drawn criticism from opposition figures. Shadow Chancellor Mel Stride warned that the proposals amount to “fresh tax hikes on hardworking savers, pensions, and businesses.”
At a time of ongoing economic uncertainty, these potential policy shifts may have significant implications for tax planning, investment strategies, and long-term financial goals. We will continue to monitor developments and advise clients on the possible impact of any upcoming changes in legislation.
If you have concerns about your current tax position or would like to review your arrangements in light of this report, please don’t hesitate to contact our team.
Harrison Pleasance, Senior Tax Manager
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