Monday, 5 Dec 2022

UK considers cutting tax-free dividend allowance, increasing capital gains tax -media

LONDON (Reuters) -Britain’s government is considering cutting the tax-free allowance for dividend income, Bloomberg reported on Thursday, before a Nov. 17 budget.

British Chancellor of the Exchequer Jeremy Hunt exits a car outside Number 10 Downing Street, in London, Britain November 1, 2022. REUTERS/Hannah McKay

The report, citing two officials familiar with the matter, added that finance minister Jeremy Hunt was looking at cutting the amount shareholders can earn in dividends before they begin paying tax from the current level of 2,000 pounds ($2,235).

“All options are under consideration,” said a government source when asked about the report.

Hunt is also looking at increasing the headline rate of capital gains tax (CGT), The Telegraph reported later on Thursday.

The finance minister is reviewing changes to the headline rate, reliefs and allowances on CGT while also considering hitting savers with an increase in dividend taxes, the newspaper said.

Broad changes to CGT, including to the headline rate, are being considered, Telegraph said, citing treasury sources, but they cautioned that much can change before Nov. 17.

The newspaper added that Treasury officials are not planning any extra help for homeowners, despite soaring mortgage rates and predictions of steep house price falls.

There will be no extension of the stamp duty cut adopted by former Prime Minister Liz Truss, Telegraph said, citing a Whitehall source.

Britain’s government is considering a plan to extend windfall taxes on oil and gas companies’ profits, as a way to raise around 40 billion pounds over five years which would help repair the public finances, Reuters had reported earlier on Thursday.

Prime Minister Rishi Sunak, in power for just over a week, and finance minister Hunt are trying to find ways to cut spending and increase revenue to plug a budget hole worsened by Truss’s debt-fuelled economic plans.

($1 = 0.8950 pounds)

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