The Resolution Foundation has put forward several recommendations for Labour’s upcoming Budget, addressing significant fiscal challenges.
- Abolishing inheritance tax reliefs for agricultural and business assets could raise £2 billion annually.
- Bringing capital gains tax rates in line with dividend and wage taxes is estimated to yield an additional £8 billion per year.
- The think tank suggests implementing a road pricing system to offset declining fuel duty revenue, potentially charging drivers 6p per mile plus VAT.
- Concerns have been raised about the economic efficiency of upcoming changes to stamp duty thresholds.
The Resolution Foundation has recommended abolishing inheritance tax reliefs for agricultural and business assets in Labour’s upcoming Budget. According to their analysis, this measure could generate £2 billion annually. This proposal forms part of broader fiscal reforms aimed at boosting the Treasury’s coffers.
Additionally, the think tank advocates aligning capital gains tax rates more closely with those charged on dividends and wages. This change could potentially bring in an estimated £8 billion per year, further contributing to the government’s revenue. Such alignment is seen as vital to ensuring a fair and robust tax system under Labour’s leadership.
One of the more innovative suggestions from the Resolution Foundation is the introduction of road pricing. This would involve charging drivers approximately 6p per mile plus VAT, serving as a substitute for the declining revenue from traditional fuel duties due to the transition to electric vehicles. This measure aims to sustain critical infrastructure funding amidst this significant shift in the automotive industry.
However, the think tank also highlighted concerns regarding planned changes to stamp duty thresholds. The threshold is set to drop from £250,000 to £125,000 in April 2025, increasing the tax burden on buyers of a £250,000 home by £6,250. The Foundation criticised this approach, arguing that it is an economically inefficient method of raising revenue and could adversely affect the utilisation of the UK’s housing stock.
A Treasury spokesman responded to these 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 Resolution Foundation’s proposals offer a comprehensive approach to addressing the UK’s fiscal challenges, but their adoption will depend on forthcoming Budget decisions.
