Chancellor Rachel Reeves may target limited liability partnerships (LLPs) as part of her plans to tax ‘those with the broadest shoulders’ in the upcoming budget.
Tasked with filling a sizeable hole in the public finances, in part due to the unexpected longer term impact of Brexit and austerity, the chancellor is reported to be considering imposing a new charge on LLPs in an attempt to equalise their tax treatment. LLP’s are not currently subject to national insurance; a new tax could be levied at a slightly lower rate than the employers’ rate of national insurance according to ‘The State of It’ podcast from The Times and The Sunday Times.
It is thought the chancellor will have little option but to break the Labour Party’s manifesto commitment to not raise National Insurance contributions, basic or higher rates of income tax, or VAT in the upcoming; although there is plenty of speculation regarding agricultural and business property relief; caps on lifetime gifting and/or considering change to the current taper rate; and a mansion tax that could see the current exemption from capital gains tax (CGT) under private residence relief end for properties above a certain threshold. CGT could be charged when homeowners come to sell their ‘primary’ residence. Higher-rate taxpayers would have to pay 24% of the value of any gain they make from the increase in the value of their property while basic rate taxpayers would have to pay 18%.
Last week a green paper published by the Institute for Fiscal Studies outlined a series of initiatives which could support efforts to balance the books with ideas including proportional council tax based on up to date property values; updated stamp duty; fuel duties; and higher tax rate on income from capital. An annual wealth tax, thought to be under consideration in the context of the non-dom regime, is ‘cautioned against’ as it would present huge practical challenges:
Speaking at the Regional Investment Summit in Birmingham announcing £6bn of administrative savings Reeves said the economy was ‘not broken’ but acknowledged it was not ‘working as it should’ for too many people.
Bills are too high… businesses often don’t have the tools that they need to succeed… …and people are feeling that they put more in but they’re getting less out.
She added the situation has to change and after ‘fix(ing) the foundations of our economy and return(ing) stability to our economy’ in last year’s budget, this year’s budget would
“take the necessary steps to secure those foundations and that stability for the future.”
