EU Referendum: Chancellor says taxes likely to rise
Chancellor George Osborne has confirmed he “absolutely” expects taxes to rise later this year, as a result of the UK’s decision to vote to leave the European Union.
Speaking to the Today Programme, he said: “It’s very clear the UK is going to be poorer as a result of what’s happening to the economy. We are absolutely going to have to provide fiscal responsibility.”
When pressed if he expected to see tax increases and spending cuts, the Chancellor said: “Yes, absolutely. But that decision will come under a new Prime Minister.”
Mr Osborne did however rule out a punitive Emergency Budget in the short-term, despite previously warning that immediate changes would be necessary should the UK vote out.
Instead, the commitment to hold taxes until the next Prime Minister is appointed means any tax hikes will probably not be announced until October at the earliest.
However, in the week before the referendum, the Chancellor hinted at which hikes might need to be made to make up for the £30 billion shortfall in Government revenues caused by leaving the EU:
- Basic rate income tax: Up 2p per pound
- Higher rate income tax: Up 3p per pound
- Inheritance tax: Up 5p per pound
- Fuel duty: Up 5%
- Beer duty: Up 5%
In the same interview, with The Times, he also said £2 billion may need to be cut from the pensions budget.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.