Jeremy Hunt eyes up raid on shareholders to fill UK’s £50billion financial black hole
JEREMY Hunt is eyeing up a raid on shareholders to help fill the UK’s financial black hole.
The Chancellor may cut the tax-free allowance for dividend income as he seeks to plug a £50billion shortfall.
Downing Street has said that no options are off the table ahead of the Autumn Statement to be delivered on November 17.
The amount shareholders can earn in dividends before paying tax could reduce from its current level of £2,000 to just £1,000 which could bring in an estimated £455 million.
Mr Hunt also recently reimposed a 1.25 per cent increase on all dividend tax rates which ranges from 8.75 for low earners t0 39.35 per cent for high earners.
Treasury sources have said that “those with the broadest shoulders should be asked to bear the greatest burden”.
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Laura Suter, head of personal finance at AJ Bell, said: “One option for the Chancellor would be to cut, or scrap entirely, the £2,000 tax-free allowance for dividends.
“Scrapping it entirely would mean lots of people earning very little in dividends would have to file a tax return, meaning the administration would likely cost more than the tax take for those taxpayers.
“A more workable option would be cutting the allowance to £1,000 or £500.
“The move would not be popular. Investors and company directors getting dividend payments have faced a continual hike in tax over the past six years with rates being increased and the tax free allowance having been slashed already.”
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Measures for raising cash may also include a windfall tax on oil and gas firm profits and real-terms cuts to Whitehall budgets.
Mr Hunt may also freeze income tax thresholds which will bring more workers into higher rates of tax due to spiralling inflation.