In addition, the government could introduce further changes to how personal service companies, or contractor companies, are taxed, and this could include aligning the dividend tax rates with the main rates of income tax.
The self-employed community has been aggrieved at the lack of government support during the pandemic and focused tax rises will not be well received, but it seems inevitable that changes will happen soon.
Pensions
Pensions tax relief is estimated to cost the government £25bn and restricting the relief should go some way to meeting the Treasury’s revenue target of £20bn.
The highest earners are now limited to only £4,000 of tax-relievable pension contributions and they may not feel overly concerned if this relief was capped to the basic rate.
It would also simplify the pensions regime, which has caused serious confusion for those with defined benefit pension schemes, including consultants working in the NHS.
Main residence relief
Main residence relief is one of the most generous reliefs in the UK’s tax system, allowing homeowners to make tax-free capital gains when they sell their main home.
With numerous changes to the taxation of residential property over the past 10 years, it is one of the last remaining ‘tax grabs’ on residential property for the government and could generate significant revenue in CGT.
The government should be nervous about introducing any tax changes that impact the housing market.
It would also seem counter-intuitive to introduce a change that restricts movement in the housing market when the stamp duty land tax holiday announced by the chancellor in July was designed to do the opposite.
Nimesh Shah is chief executive of Blick Rothenberg
