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lawyers, GPS And accountant Will reportedly face higher taxes as Rachel Reeves looks to boost the Treasury’s coffers by targeting the wealthy.
In her Budget next month, Ms Reeves is expected to announce a charge on workers who use limited liability partnerships, raising £2bn as she tries to bridge the gap between an estimated £30bn in public finances and £50 billion,
According to Money.co.uk, there are 355,760 partnerships in the UK, of which 86,030 have employees. They are especially common in the legal world. Partnership does not pay employer National Insurance Of 15 percent because partners are considered self-employed. Partners also pay a lower rate of employee NI.
But as reported, Ms Reeves is preparing to announce changes to the system in her budget Many times.
It would impose a new levy on partnerships in an effort to “equalise tax treatment”. But the charge is expected to be set at a slightly lower rate than employers’ National Insurance rate.
The Center for the Analysis of Taxation (CenTax) found that solicitors receive one fifth of all partnership income, an average of £316,000 in company profits each year. For GPs, the average is £118,000 and for accountants it is £246,000.
The more than 13,000 partners are thought to earn an average of £1.25m a year.
Ms Reeves is also expected to announce a “mansion tax”, which would impose a capital gains tax on the sale of the most expensive homes.
He said this on Tuesday while demanding to pave the way for tax increase. Brexit and austerity had a big impact Higher than expected on public finances.
Office for Budget Responsibility ,OBR) is expected to cut Britain’s growth forecasts next month and economists believe it is increasingly likely the Chancellor will do so break his manifesto pledge Don’t increase income tax, VAT or national insurance just to balance the books.
Ms Reeves said: “We know the OBR – I think we will be very clear about this – [will say] Things like austerity, capital spending cuts and Brexit have had a greater impact on our economy than ever before.
“That’s why we’re unashamedly renegotiating our relationship with the EU to reduce some of the costs that have, in my view, been unnecessarily added to businesses since 2016 and since we formally left a few years ago.”
Centax Director Arun Advani said many times There was no reason why partners should pay less tax than similarly highly paid employees and business owners.
He said, “Because partnership income is highly concentrated, with almost half of it going to those in the top 0.1 per cent, exempting any partner from the equivalent of employer NICs is deeply regressive and simply means higher taxes for everyone else.”
He said the absence of Employers National Insurance had arisen from a series of small accidents.
Stuart Adam, a senior economist at the Institute for Fiscal Studies, said: “People in LLPs are generally very well off and in many cases they are supplying their labor like ordinary employees, so it is not clear why they should get preferential treatment.
“But like any tax increase, it may provide disincentives to work. There may also be other ways in which people may respond, including in the most severe cases leaving the UK or not coming to the UK in the first place.”
The Treasury has been contacted for comment.