RACHEL Reeves is set to increase dividend tax in a “hammer blow” to investors in the upcoming Budget.
In a move that has sparked fury, the Chancellor will reportedly increase the tax rate on earnings from shares in her Autumn budget this month.
Brits are bracing for a raft of tax hikes on November 26 as Reeves attempts to fill a £30 billion black hole in the public finances.
Reeves is now expected to increase the rate of dividend tax in a bid to raise £2 billion, according to The Telegraph.
It has been described as a “hammer blow” to investors and is also expected to hit pensioners who rely on income from shares.
Shadow Chancellor, Sir Mel Stride, told the outlet that Reeves is “planning to go back on her word yet again”.
“If these reports are true, it would be another hammer blow for investment, saving and wealth creation in this country,” he said.
“Reeves can point the finger all she likes but this budget black hole is of her own making – and now investors, pensioners and working families are paying the price for her failure to get a grip on spending.”
Millions of pensioners also face paying an extra £380 a year in tax under Rachel Reeves’ budget plans.
The Chancellor is expected to increase income tax by 2p in her Autumn Budget, while cutting National Insurance (NI) payments by 2p for earnings under £50,270.
This would ease the burden on workers, as the income tax hike would be offset by the NI cut.
But pensioners, who don’t pay National Insurance, would take a huge hit to their savings.
Meanwhile, driving to France on holiday is set to get more expensive for families under plans for a new road tax.
Reeves is said to be looking at introducing a pay-per-mile road charge for electric vehicles which could slap drivers of lighter EVs with an extra charge of 3p per mile, while those with heavier EVs could have to pay up to 9p per mile.
Not only would the rules apply when driving on UK roads, but motorists would also have to pay the tariff when taking their cars abroad.
It would push up the cost of holidaying to France and other European countries by car for the more than 1million Brits who drive an EV.
What other tax hikes are expected in the Budget?
In another blow to motorists, Reeves is expected to axe the 5p temporary cut in fuel duty introduced in 2022.
She is expected to hike income tax by 2p – a breach of Labour’s election promise.
While this would be offset by a 2p National Insurance cut for workers paying the basic rate of tax (20%), pensioners and landlords would take a hit.
It also emerged this week that the Chancellor is to target salary sacrifice pension schemes.
Salary sacrifice allows an employee to deposit a share of their income, which is matched by their employer, into a pension scheme.
At the moment, there’s no limit on how much workers can save before paying national insurance.
But under plans first reported in The Times, workers would have to pay the full rate of NI once they saved £2,000.
