The Conservatives are urging Chancellor Rachel Reeves to "urgently rule out" increasing share taxes in the upcoming autumn budget, following the leak of a memo from Angela Rayner suggesting a series of tax hikes.
The Tories argue that leaving investors "in limbo" could harm the economy.
The party claims that scrapping the £500 dividend allowance would pull an estimated 5.22 million more individuals into paying investment levies.
This pressure on ministers comes after a document, reportedly sent by the Deputy Prime Minister to Ms Reeves, was leaked to the press.
In the memo, Ms Rayner proposed removing the dividend allowance to generate approximately £325 million annually, as well as axing inheritance tax relief for AIM shares and increasing dividend tax rates, according to The Telegraph.
Shadow chancellor Mel Stride commented: “The Government need to urgently rule out these tax hikes on savers and investors before speculation causes further economic harm.
“Labour don’t understand how business works and how to create growth. More taxes on investment, entrepreneurship and saving are the last thing our economy needs right now.”
The Government’s U-turns over welfare reform and winter fuel payments have left the Chancellor with a multibillion-pound black hole to fill, fuelling speculation that she will seek to raise revenue through tax hikes.
The Tories claimed axing the dividend allowance would drag “an estimated 5.22 million more people into paying dividend tax”.
This figure appears to be based on an assumption that at least 8.82 million people in the UK hold shares that pay dividends.
Some 3.6 million are already subject to dividend tax, according to data obtained by investment platform AJ Bell through a Freedom of Information request.
The Chancellor last year said she would not be “coming back with more borrowing or more taxes” after her first budget but has since refused to rule out raising specific levies, saying it would be “irresponsible” to do so.
A Labour Party spokesperson said: “The Conservatives have some brass neck. They’ve still not apologised for the damage caused by the Liz Truss mini-Budget, nor the £22 billion black hole they left – which hammered firms and families across the country.
“Labour is doing more to support business than the Tories ever could.
“We’ve already delivered three historic trade deals and four interest rate cuts – to reduce costs and put money back in people’s pockets.”
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