Traditionally, August presents something of a silly season. Not this year, where feverish speculation about tax allowances, reliefs and rises is everywhere. At heart of the speculation are measures already passed but not yet implemented, debate about what the Chancellor may do in the Budget later this year, and overhanging it all a promise not to raise income tax, VAT and corporation tax. That has put the focus on all sorts of other potential tax raising ideas and policy proposals.
Tony Wickenden, writing in Money Marketing, attempts to take a measured view of the dilemmas facing the Chancellor Rachel Reeves summed up here - Low growth leaves the chancellor with tough tax choices.
There has been speculation that the Chancellor could look to alter the pension tax-free cash lump sum limiit, but the key message from industry 'stakeholders' is to remain cautious in the face of leaks and rumours reports Professional Adviser.
I have to say I a few doubts about the source story where Treasury sources seem to pour cold water on the story. The Telegraph challenged the Treasury to confirm or deny its plans around tax free cash, but generally that isn’t how the communications around the Budget operate or otherwise, you could essentially reveal all plans under consideration with close questioning.
This is tough stuff to read, and, of course, the Treasury is rather hypocritical. It will test plans or more reasonably occasionally ‘pre-consult’ with various sectors on practical changes. It is just that it doesn’t seem to be doing so around tax-free cash.
One example of where the media is not spinning things too far is the matter of a possible new tax on homes worth more than £1,500,000 perhaps in exchange for reforming or removing stamp duty. This does seem to emanate solidly from Treasury sources.
The original story was reported in the Times, but for those without a subscription the Guardian covers the story here.
Homeowners selling properties above that level would be subject to a capital gains tax at 18% for basic-rate taxpayers and 24% for higher taxpayers.
Other changes being considered include a suggestion from the thinktank Onward to impose an annual charge of 0.54% on the portion of a home’s value above £500,000, rising to 0.81% on the portion above £1m, though officials stressed to the journalist concerned that no decisions had been made.
Meanwhile, the Guardian, this time with its own scoop, previously reported that ministers have been considering replacing stamp duty with a new national property tax, payable by owner-occupiers when homes are sold. It could be accompanied by a longer-term plan to replace council tax with a proportional levy linked directly to property values.
This tax would apply to homes worth more than £500,000, so obviously impacted much more of the market.
Mortgage brokers are warning that anything that looks like a Mansion Tax, at either the £500,000 or £1.5m level would freeze that part of the property market. Mortgage Strategy reports.
How advisers communicate all this is one thing, but it does feel like it is property, not pensions, that will be the focus of the next Budget. (The pension changes are already baked in.)
One to annoy advisers. The Pensions Minister Torsten Bell, often credited with being much more of an intellectual than some of his colleagues, has been indulging in the blame game on LBC. He suggested that advisers were marketing pensions for IHT purposes. Anyway, I responded in an opinion on OctoMembers.
In other news, the FCA says it expects uptake of its new targeted support permission to be used predominantly by large firms, many of which may choose to offer it digitally, as FTAdviser reports.
One final story. FNZ announced it was fully embracing Artificial Intelligence to redefine adviser productivity and scale personalised advice. It didn't get much coverage but the press release is here.
This could prove a huge move with both global and UK implications – one to watch.
