Jeff Prestridge  

Britons are in for a rough ride

Jeff Prestridge

Jeff Prestridge

Summer is upon us. Barring the FA Cup Final and the Championship play-off final shortly afterwards, the football season is over and done with.

Schools have broken up – in a matter of fashion – and some Britons are already heading off to enjoy the hedonistic delights of Magaluf on the beautiful island of Mallorca, only to be met with tough crackdowns and lockdowns.

Yet, holiday or no holiday, rain or shine, it is going to be a worrying summer for many households as the end of furlough begins to appear on the horizon.

Lockdown, crackdown, followed by financial meltdown. It is not going to be pretty from here on in.

Unemployment is going to blight the nation as the economy contracts at an alarming rate.

There is also another horrible monster lurking on the horizon. It is called tax, and in particular, tax rises.

Earlier this month, Paul Johnson, the highly regarded director of the Institute for Fiscal Studies, said that a “reckoning, in the form of higher taxes, will come eventually”.

Maybe this ‘reckoning’ will come in the Autumn Budget, maybe later, but at some stage the government is going to have to claw back some of the cost of the £190bn of support it has so far provided to keep the economy falling off a proverbial cliff.

When this tax grab begins, it will be the middle classes and the wealthy who are likely to bear the brunt. Fair? Yes.

But it is not going to go down very well with many Tory supporters who will argue with some political justification that such tax hikes are normally (not always) the preserve of Labour governments.

For sure, the government will be walking a tightrope.

The whispers have already started about what the chancellor of the exchequer Mr Rishi Sunak might have in store. Earlier this month he set the cat among the pigeons by ordering a review of the regime governing capital gains tax.

Although such ‘reviews’, undertaken by the Office for Budget Responsibility, are not uncommon (the last one was in 2018 when the OBR looked into inheritance tax), the timing of the announcement suggested that Mr Sunak may already have one eye on CGT as one way to boost the government’s coffers.

But it will not necessarily start or end with CGT.

As the Budget creeps ever nearer I am sure that rumours about other taxes rising will bubble to the surface. There will also be speculation about some generous tax breaks being curtailed.

The Public Accounts Committee has already called for a review of pensions tax relief that cost £38bn in the financial year ending April 2019.

The parliamentary committee is not totally convinced about the merits of the tax break – and in particular whether it “just enables those already saving comfortably to save more”.