LONDON: An exit charge for wealthy Britons leaving the country and increased levies on expensive homes are on a long-list of possible tax increases being considered by Chancellor of the Exchequer Rachel Reeves ahead of the budget.
Treasury officials have drawn up options for dozens of possible hikes to help Reeves fill a fiscal hole of as much as £35bil (US$46bil) on Nov 26, only some of which she will eventually proceed with, according to people familiar with the matter.
They cautioned that the chancellor hasn’t decided which tax rises she’ll pick.
She would only do so once she receives the final fiscal forecast from her budget watchdog and has a clear picture of how much revenue she needs to raise, they said.
Reeves is considering bolder and more progressive tax changes than some investors and Labour lawmakers have been expecting, Bloomberg had reported.
She wants to take advantage of a productivity downgrade from the Office for Budget Responsibility, which is set to deliver a further £20bil hit to public finances, to simplify the tax system and make it fairer, people familiar with the matter said.
That means many of the potential tax hikes being considered are focused on the better-off, the people said.
The Times newspaper reported last weekend that Reeves was keen on introducing a “settling-up charge” on wealthy Britons fleeing for tax havens.
While those emigrating from the country can currently sell UK assets after leaving without facing capital gains tax, the chancellor is mulling making them pay a 20% charge at the point of departure, the newspaper reported.
It would raise some £2bil for the Treasury.
Many other major economies already have similar policies, though some tax experts doubted whether Reeves would go ahead with an exit tax.
Dan Neile of Tax Policy Associates said on X that the government faced a risk that people would see speculation about the policy and leave to pre-empt it.
Reeves has faced criticism that she has presided over a “wealth exodus.”
A number of high-profile investors and entrepreneurs quit the United Kingdom in response to Labour abolishing non-domiciled tax status at its first budget after winning the general election last year.
Several newspapers have reported that Reeves is looking at reforming council tax to raise more revenue from Britain’s more expensive properties.
That has led to suggestions that she is effectively considering a tax on mansions, a policy that has been popular with Labour members of parliament in the past.
An opinion poll last week showed that most Britons would support a wealth tax, although Reeves has repeatedly ruled out imposing a standalone levy. — Bloomberg
