The Chancellor will announce a number of changes to the UK’s economic policy and many fear tax rises. Pensions could be targeted by a “stealth tax” in the Budget, the Times reported last week. Mr Sunak is said to be planning a freeze on the lifetime allowance – the amount people can build up in their pension pot before incurring punitive tax charges. The freeze would mean more people being dragged over the threshold and could see them face a 25 percent levy on any additional income from their pension pot, rising to 55 percent if they choose to draw down a lump sum.
The changes would also result in 10,000 people with a larger pension paying more than £22,000 extra by 2024.
Experts have estimated that the policy could raise £250million-a-year for the Treasury.
IHT has also been the subject of speculation, as various experts recommend reform.
At the moment, the standard IHT rate is 40 percent and it is only charged on the part of the estate that is above the threshold.
Currently, there is normally no IHT to pay if an estate is valued below the £325,000 threshold.
Similarly, there is also no IHT to pay if someone leaves everything above the £325,000 threshold to their spouse, civil partner, a charity or a community amateur sports club.
However, Simon Goldring, of wealth advisers McDermott Will & Emery, said in September that he had started helping clients make gifts in case of increases.
He told the Telegraph: “In one case a client has made a partial transfer, gifting just 50 percent of the property to take advantage of the stamp duty saving, as well as shielding the asset from IHT, while only paying a small rate of capital gains tax.
“Clients are cautious, but depressed values in stock markets and higher value properties, coupled with the real threat of tax increases, makes now a good time to be doing these things.”
READ MORE: Rishi Sunak could hit pensions with charge: ‘Tempting for Treasury’
Richard Murphy of Tax Research UK warned against tax increases in an interview with Express.co.uk last year.
He said: “At first, Rishi Sunak completely underestimated what was going to happen, it was a complete disaster, because he hadn’t realised how disastrous coronavirus was going to be.
“But he was back a week later with the furlough scheme, it was smart, quick, some people lost out when they shouldn’t have done.
“Now Sunak’s obsession with debt is kicking in again.
“If he opts for austerity and tax hikes, then frankly we are heading for depression rather than a recession.”