Chancellor Rachel Reeves is considering a £2 billion tax increase targeting lawyers, accountants, and doctors to address a significant budget shortfall, reports BritPanorama.
The proposed measure could affect approximately 190,000 professionals operating under ‘limited liability partnerships’ by introducing a new tax charge aimed at boosting government revenue.
Currently, these partnerships benefit from tax exemptions as they are classified as self-employed, exempting them from employer’s national insurance contributions. This change would impose additional financial burdens, raising concerns about its impact on the middle class if implemented next month.
A solicitor withdrawing £316,000 from such a partnership would face an estimated tax increase of £23,000. Amid these discussions, Reeves also hinted at the possibility of a ‘mansion tax,’ to be assessed annually or attached to capital gains for high-value properties.
Reeves is working to bridge a £30 billion gap in the national budget as UK borrowing reached nearly £100 billion for the first half of the financial year, exceeding forecasts by £7.2 billion. This record borrowing marks the second highest level for the April-September period since 1990, only surpassed during the pandemic.
Under fire from the Conservative opposition for her fiscal strategies, which they label as ‘spend today, tax tomorrow,’ Reeves acknowledged that the economy is “not working as it should.” Speaking at an investment summit, she emphasized the necessity for reform: “Bills are too high. Businesses often don’t have the tools they need to succeed, and people feel they contribute more while receiving less in return. That has to change.”
As the government faces growing pressure to stabilize the economy, the Chancellor’s proposed tax increases and spending cuts could significantly shape the financial landscape moving forward.
