With the Budget just less than a week away, a recent survey reveals that most Brits are worried about potential tax hikes, yet the poll highlights a divide on tax strategy.
According to a survey by AJ Bell conducted from October 2-4, representing 2,054 UK adults, two thirds of respondents expressed concerns around their personal finances with regards to increased tax fares.
Since this survey was carried out earlier this month, this anxiety may have intensified, with numerous reports naming tax rises as an inevitability.
The public was split, however, in terms of tax strategy. 30 per cent were in favour of a reduction in overall taxes, whilst 28 per cent said they would accept an increase.
However, there is a more unified stance when the respondents were asked about specific tax categories.
A good number of people targeted significant hikes such as dividend tax (38 per cent), inheritance tax (30 per cent), and capital gains tax (44 per cent).
The results also revealed that over half (54 per cent) of them supported increasing the higher rate of income tax, with 65 per cent thinking those in the additional rate tax bracket should face even higher income tax.
The introduction of a wealth tax on personal assets was supported by 53 per cent of respondents, reflecting a measure gaining traction as the UK tries to deal with how to fund critical public services without tarnishing its manifesto pledges.
Although there is support for targeted increases, the results show that the government should be cautious with any changes to employer national insurance, as only 31 per cent back an increase to its contributions.
However, the public shows a strong preference for pension stability, with only 22 per cent supporting the restriction of pension tax incentives.
AJ Bell’s Tom Selby advocates for a ‘pensions tax lock’ to protect such incentives: “Labour should harness that general feeling from the public to commit to a Pensions tax lock”.
Rachel Reeves is navigating a narrow fiscal path, yet labour has pledged not to raise the ‘workers’ triple lock’ of income tax, VAT or national insurance.
However, as Selby said that this triple lock “is the clearest indication yet of the extent to which the party has boxed itself in one of the most powerful tax levers it could pull”.
Brits have said that they haven’t yet taken steps to prepare for these increases, and among the third (32 per cent) who have, many have turned to ISAs.
“Where (Brits) actually stand on tax paints a somewhat fragmented picture”, says Selby.
Reeves will have to navigate introducing policies that fulfil her promises and meeting revenue needs whilst maintaining public support at the Budget next week.