Income Tax is paid on earnings, and thus an alteration taking place to the levy is likely to affect millions of workers, depending on how such a move is enacted. With the Budget just around the corner, speculation on tax increases has sharply risen as experts wonder if the Treasury will attempt to claw back high amounts it has spent over the last year. Now, with mere days away, it will be important for Britons to understand the potential implications of the economic event.
Ms Ross described it as potentially more “palatable” for the Exchequer to increase the very top rate, although contemplated how this would affect the behaviours of very high earners.
It could be the case she said, that even if the rate of tax goes up, it would not directly result in a higher tax take for the Exchequer.
However, a change to Income Tax could upset Tory voters who were guaranteed no rise in Income Tax, National Insurance or VAT would take place, as outlined in the Conservative manifesto.
Ms Ross added: “It could be the case, though, that in these extenuating circumstances the Chancellor will be ‘let off’ so to speak.
“No one could have envisaged the amount of money which has had to be put out there to support people and the economy. Anything is possible. All bets are off.”
Another tax change which is potentially just around the corner is Capital Gains Tax, commonly known as CGT.
CGT is a tax on the profit when a person sells something which has increased in value.
It is the gain an individual makes which is taxed, rather than the amount of money they receive.
However, CGT has been greatly anticipated to undergo alterations, partly owing to a recent report by the Office for Tax Simplification which made suggestions on how the tax could be modified.
Ms Ross offered additional insight, stating: “CGT is a minnow in comparison to Income Tax, but it potentially wouldn’t be quite as unpopular as many people aren’t aware they have a Capital Gains Tax allowance almost as high as their Income Tax allowance.
“They also may not be aware that this isn’t affected by anything like them being a high earner, for example.
“Most people fail to use their CGT allowance from year to year, and of course if it isn’t used then it is lost. So the majority of people who do have gains have these covered by allowance.”
Ultimately, though, what the Chancellor chooses to enact on Wednesday is still uncertain.
While Britons may wish to prepare for changes and different eventualities, Ms Ross offered a warning.
She concluded: “The Exchequer, and we’ve seen this before, can get some extra money now, just on the rumour of a tax change.
“Some people may take action, for example, on their CG which they may not have done otherwise – and to a certain extent there will be an acceleration of the tax take.
“Others, though, will simply wish to be in control and have certainty before March rolls around, and this can be sensible too.
“However, you should only act if it supports the goals you have laid out for yourself in the long-term.
“Things can always change and it is particularly important to be aware of this.”