Jeff Prestridge  

Britons are in for a rough ride

Jeff Prestridge

Jeff Prestridge

I imagine that higher rates of capital gains tax would be a relatively easy measure for Mr Sunak to justify.

After all, the current rates applied to crystallised gains made by basic, higher and additional-rate taxpayers are lower than for those on income.

Also, it is not as if most capital gains on investments made by taxpayers cannot already be protected from tax – through the astute use of their £12,300 annual tax-free capital gains allowance, maximising their generous annual Isa allowance, and using pensions to invest.

Of course, higher CGT rates could be combined with a slashing of the annual exemption, a reduction in the £20,000 Isa allowance or the £40,000 annual pension allowance – or all three together.

Such a ‘combined’ move, I am sure, would meet with howls of protest, although these would sound like whimpers compared with the venting of spleens that would take place if Mr Sunak decided to widen the CGT net to include the sale of first homes.

That would represent a step too far for most homeowners up and down the country and I am sure it would result in defeat for the Tories at the next election.

What is interesting is that tax rises are now seen as inevitable.

Yet when Labour published its general election manifesto late last year, it was widely ridiculed for proposing higher taxes to fund a £83bn spending spree (yes, I was among the ridiculers).

With regards to CGT, Labour stated that “we will end the unfairness that sees income from wealth taxed at lower rates than income from work”.

It would do this, it said, through higher CGT, a savage CGT allowance cut and higher taxes on dividend income.

Some of these measures could well end up being introduced by Mr Sunak. How ironic. 

Enjoy the summer. The calm before the storm.

Jeff Prestridge is personal finance editor of The Mail on Sunday