Rachel Reeves could hike wealth taxes to help raise her ￡40billion target (Image: Getty)
Chancellor Rachel Reeves could make changes to inheritance tax that would be "painful" for savers, an expert has warned.
Ahead of Wedesday's budget, speculation around which taxes could be hiked by Ms Reeves is growing. One area that could come under the microscope is wealth taxes, and experts are predicting that inheritance tax could be targeted.
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Ms Reeves has a number of options to raise more money through the levy, such as changing exemptions, allowances and reliefs.
James Norton, of fund group Vanguard Europe, told the Telegraph that changes to inheritance tax could hit savers hard.
He said: “There is a high degree of uncertainty about tax changes ahead of the autumn Budget and we’ve been warned of some potentially painful outcomes for individuals.
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Savers could miss out on exemptions if changes are made (Image: Getty)
“While this can feel daunting, savers and investors should not let speculation cloud their judgement – maintaining clear goals and a long-term investment perspective will continue to be crucial in setting you up for future success.”
Inheritance tax is only paid at a 40% rate for anything over the ￡325,000 threshold. About 4 percent of deaths result in inheritance tax being paid.
The levy can be dodged through various methods, such as gifts. But it has been reported that gifts could be clamped down on.
Another wealth tax that could see changes is capital gains tax.
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Starmer has dismissed a CGT rate of 39% (Image: Getty)
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It is charged on the profit made from the sale of assets. Higher earners are hit with a 24% levy on gains from selling additional property, or 20 percent on profits from other assets like shares.
There has been speculation suggesting that the tax could be increased, or even aligned with income tax. Prime Minister Sir Keir Starmer seemingly dismissed speculation that capital gains tax could be raised to a 39% rate.
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He said such speculation was "wide of the mark."On the various reports, Sir Keir added: “Yeah, it’s getting to the area that is wide of the mark.
“But I’m not going to fuel the speculation, because we can go on like this for a very long time till Budget day.
“Everybody knows that until Budget day, none of it is going to be revealed."