All the things I would do if I were Chancellor

Published by Jeff Prestridge on 09 September 2014.
Last updated on 10 September 2014


Do you ever dream in your wildest moments of being Prime Minister for a day? Or what it would be like to be the Queen as she goes about her duties? Or even the eccentric Duke of Edinburgh?

My recurring dream – or nightmare in the eyes of some of my friends – is to be the Chancellor of the Exchequer. What a thrill it would be to preside over government department spending budgets (I only control the personal finance budget at The Mail on Sunday) and to sit before the House of Commons and deliver the annual Budget.

I certainly have some strong thoughts on what any Chancellor should be doing to make life a little more tolerable for the marvellous citizens of this country.

First things first…

For a start, if I were Chancellor, I'd sort out higher-rate tax. When Chancellor Lawson (now Lord Lawson of Blaby) introduced 40% tax 26 years ago, it was a tax that only one in 20 people paid. But today, 4.6 million people pay it (about one in six taxpayers) with the higher rate kicking in once a taxpayer's income hits a threshold of £41,865.

It's no longer a tax for the rich but for ordinary hard-working people – nurses and teachers in senior positions, for example. It was never meant to be this way.

The Office for Budget Responsibility, an independent public body set up to scrutinise the country's public finances, says that unless the threshold is raised significantly in the near future, 9.2 million people will be paying 40% tax by 2033.Together with the 1.7 million that will be paying additional-rate tax of 45p on earnings above £150,000, it means that a third of the workforce could be paying higher-rate tax or more.

The Prime Minister recently put pressure on the Chancellor to raise the higher-rate threshold by stating he would "love" to see it lifted. And even Lord Lawson has said the threshold needs raising. If I were his Chancellor, I'd make it a priority.

Stamp duty

Stamp duty is also in massive need of an overhaul. I have never understood why stamp duty is applied in the way it is. It is simply unfair that someone buying a house worth between £125,000 and £250,000 pays stamp duty of 1%. But if the house is worth £251,000 (or
any value between £250,000 and £500,000), it jumps to 3% on the entire amount, eventually rising to 7% on property transactions above £2 million.

Paul Johnson, director of influential think tank the Institute for Fiscal Studies, describes stamp duty as a "very bad bit of the tax system" while Stephen Herring, head of taxation at the Institute of Directors, says it is "ridiculous" that stamp duty has not been reformed.

Both are right. Stamp duty in its current form inhibits job mobility and prevents people from moving up the housing ladder as they make a success of their lives. With average house prices now standing at £262,000 – nearer £492,000 in London – stamp duty is the homebuyer's curse.

If I were Chancellor, the nil-rate threshold would be raised to £500,000. I would then scrap how it is now charged and instead apply the tax in bands – say 1% on property values between £500,000 and £750,000, then two per cent for properties between £750,000 and £1 million, and a higher rate on any value above that figure.

Finally, I'd lift the nil-rate threshold for inheritance tax from its current level of £325,000 (a level it's been frozen at since 2009). Before the last election, the Conservative Party pledged to raise it to £1 million but that went out of the window as a price for coalition government. A threshold of £1 million seems reasonable enough to me.

There is more I would do - bring in flat-rate relief on pension contributions, for example. But there is only so much a man can do in a day.

If only I were the Chancellor of the Exchequer.

Dream on Prestridge!

Jeff Prestridge is the personal finance editor of the Mail on Sunday. Email him at

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