Put on your seat belts. Tax rises are coming
While we wait for all the party manifestos to be published in full, tax professionals are analysing every sound bite and interview for any hints about tax changes.
Predicting change is unusually difficult because no-one really knows what will happen to the economy in the next couple of years. A few clues have emerged: Theresa May, for example, is on record as stating that VAT will not increase from 20%. Both consumers and businesses will welcome this news.
However, if there is no increase in VAT, then a Conservative government would have a £2bn shortfall. This is the sum which was ‘lost’ when the increase in National Insurance for the self-employed was abandoned earlier this year.
The assumption among tax professionals is that direct taxes would be increased. But which ones. Some consider it unlikely that capital gains tax and inheritance tax would be affected, beyond tinkering around the edges. Similarly stamp duty was increased in the last few years and it is difficult to see how it could be squeezed further.
Income tax and NI contributions are the only taxes left for a Conservative chancellor to adjust in order to bring in much needed finance. A post-election budget speech could contain news that no-one in the profession wants to hear.