The Resolution Foundation has presented a compelling case for substantial tax reforms to be included in the forthcoming Budget. These recommendations are targeted at addressing the increasing fiscal pressures facing the government.
The think tank’s report proposes the elimination of inheritance tax reliefs for agricultural property and business assets, which could generate £2 billion annually. Moreover, aligning capital gains tax rates more closely with those charged on dividends and wages has the potential to bring in an estimated £8 billion per year. These measures are intended to bolster the Treasury’s finances as part of wider fiscal reforms under Labour’s leadership.
The report also advocates for the introduction of road pricing, potentially charging drivers 6p per mile plus VAT as a replacement for diminishing revenue from fuel duty. As the shift to electric vehicles reduces income from traditional fuel taxes, this approach could help sustain essential infrastructure funding.
However, the Resolution Foundation also emphasised the need for targeted tax cuts, particularly in relation to stamp duty. The current threshold for stamp duty on property transactions is set to fall from £250,000 to £125,000 in April 2025, effectively increasing the tax burden on buyers of a £250,000 home by £6,250. The Foundation criticised this as an economically inefficient method of raising revenue, arguing that it could impede the effective utilisation of the UK’s housing stock.
A Treasury spokesman commented on the recommendations, stating: “Following the spending audit, the Chancellor has been clear that difficult decisions lie ahead on spending, welfare and tax to fix the foundations of our economy and address the £22 billion hole the Government has inherited. Decisions on how to do that will be taken at the Budget in the round.”
The recommendations from the Resolution Foundation present significant potential changes to the UK’s tax landscape, aimed at addressing pressing fiscal challenges. The forthcoming Budget will reveal how the government intends to respond to these proposals.