Two thirds of people (66%) are concerned about the potential impact of tax rises on their personal finances at the Budget next week, according to a recent survey carried out by AJ Bell. Yet Brits appear split on whether their overall taxes should be increased (28%) or decreased (30%).
Increases to capital gains tax (44%), dividend tax (38%) and inheritance tax (30%) all received relative support, while increasing employer National Insurance (NI) saw 31% support.
Over half (54%) of people support an increase to the higher rate of income tax, with almost two thirds (65%) believing those in the additional rate tax bracket should see increases in their rate of income tax.
Restrictions to pension tax incentives among the least popular measures to raise revenue, with 22% support while more than half (53%) support the introduction of a wealth tax on the value of a person’s assets.
Three quarters (74%) of Brits are yet to take steps to prepare for potential tax increases, with a third (32%) of those that have taken steps using an ISA to shelter money from the taxman.
Tom Selby, director of public policy at AJ Bell, comments: “The challenge facing Labour and Chancellor Rachel Reeves in next week’s Budget is one that has been more than well documented of late, but the tax preferences of the British public can sometimes develop by proxy, feeding off the countless stories of rumours and speculation that have besieged them through the media. Where they actually stand on tax paints somewhat of a fragmented picture, with many broadly supportive of a whole host of potential measures.
“Over half and as many as two thirds of Brits support increases to income tax for higher and additional rate taxpayers respectively, as well as 53% who support the introduction of a wealth tax. This compares to 31% support for increasing employer NI, which suggests a raid on employer NI or NI on pension contributions would likely be one of the lesser evils Reeves could go for.
“Meanwhile, restricting pensions tax incentives was among the least popular options, with just a fifth believing the chancellor should go down this road. The government should harness that general feeling from the public to commit to a Pensions Tax Lock, delivering stability in the pensions tax system for at least the remainder of this Parliament. Not only would this demonstrate that Labour really is on the side of working people who have saved for the whole of their careers to achieve a good standard of living in retirement, but it could turn much of the recent negative media attention around a pensions tax raid on its head and potentially avoid further strike action from public sector workers to boot.
“Labour is unlikely to renege on its workers’ triple-lock of not increasing income tax, National Insurance or VAT, but perhaps this is the clearest indication yet of the extent to which the party has boxed itself in on the most powerful tax levers it could pull to raise money to fund public services. That’s not say there aren’t measures which by all accounts genuinely are on the table that don’t receive support. Indeed, 44% would be in favour of an increase in capital gains tax, something that appears increasingly likely to feature in the chancellor’s speech next Wednesday.
“In any case, the fact three quarters of people have not yet taken any steps to prepare for potential tax rises suggests a degree of apathy towards the whole thing, contrary to some reports. What’s obvious is that the government has a limited number of options and we should expect to see all sorts of changes next week that Labour will claim toe the line of its manifesto. Whether or not the public are understanding and rally behind them remains to be seen.”
Source: AJ Bell, Opinium. Q2: Chancellor Rachel Reeves has talked about a £22 billion hole in public finances that must be balanced. To address this, it is expected that the government will announce further changes to public spending and taxes in the Autumn Budget later this October. Below is a list of taxes and duties the government can increase in order to raise money for public finances. Which of these do you think the government should increase most to help with public finances?
