What will Rishi do?

Chancellor Rishi Sunak has built up quite a bit of credit with the British public during the Coronavirus crisis.

He won plaudits for the speed with which he introduced the furlough programme, which has been accessed by 9.5million workers, the roll out of various business loans and grants and, most recently, his Eat Out To Help Out scheme.

But, as we know, all the above came at a huge cost to the Treasury, something that will have to be recouped over the coming months and years.

November’s Budget will give us the first indication as to how the Chancellor intends to get the UK economy back on track.

Media briefings suggest that he will announce various tax rises, but probably staggered to avoid too much pain too quickly for a public still very much in the early stages of recovery from the impact of the crisis.

Officials are even said to be considering reforming CGT so it is paid at the same rate as income tax.

As a result, the tax on profits from selling assets would rise from 10 to 20% for basic-rate taxpayers.

The tax rate would also increase from 18 to 20% for profits on the sale of second homes.

For higher-rate and additional-rate taxpayers, the levy could rise from 20% on asset sales and 28% on property sales to 40% respectively.

I anticipate having calls with clients over the coming weeks looking at various options including the possibility of liquidising assets rather than being hit by potential increases in CGT taxes later.

Corporation tax is almost certainly also in the Chancellor’s sights with a likely rise from the current level of 19% – one of the lowest rates among leading economies – to as much as 24%.

The other big area of reform is likely to be around pensions with an expectation that pension tax relief will have to change with the possibility that a flat rate of 20% might be introduced, hitting higher rate tax payers.

Those with company final salary schemes, including key emergency workers like doctors and police officers, are also set to be impacted by tax changes.

All of which makes for the most important and contentious Budget in a generation or more. Rishi will be hoping he is still in credit with the British public once the full implications of his decisions become clear.