The Chancellor is considering a significant tax raid on dividends as part of her autumn Budget, new reports suggest.
Abolishing the tax-free allowance alone could generate more than £300 million for the Treasury.
Treasury officials are examining plans to either scrap the £500 tax-free allowance or increase the current 39 per cent rate.
The move would allow the Chancellor to argue she has not breached Labour's pre-election commitment to avoid raising taxes on "working people".
The dividend tax proposals were included in what The Sunday Times described as a "dossier" of potential tax changes being prepared by officials.
Senior Government figures did not deny the existence of these plans when approached for comment last night
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Senior Government figures did not deny the existence of these plans when approached for comment last night, The Telegraph said.
Treasury officials are also examining an increase to the bank levy, which currently stands at three per cent on top of the standard 25 per cent corporation tax rate.
The Chancellor could restore the levy to its pre-2023 level of eight per cent, or adopt a compromise position of between 5 and 6 per cent.
The proposals emerged from a leaked memo by Angela Rayner, which suggested various revenue-raising measures totalling between £3billion and £4billion.
These included freezing tax thresholds and adjusting headline rates. The menu of options being prepared for ministers ahead of the autumn Budget is standard practice before fiscal events.
The Government's spending plans will be assessed by the Office for Budget Responsibility.
The urgency of finding additional revenue has intensified following last week's growth figures showing the economy contracted by 0.3 per cent in April.
The Chief Secretary to the Treasury, Darren Jones, declined to rule out additional tax increases when questioned on Sunday, despite previous assurances they would not be needed.
The urgency of finding additional revenue has intensified following last week's growth figures
PASpeaking on The Camilla Tominey Show on GB News, Jones said any tax decisions would be "subject to the OBR forecasts" and insisted it was "right" that ministers approached them in an "orderly way".
"You're going to have to wait," he told the broadcaster when pressed for details.
The Government has maintained that its tax policies would not affect "working people", citing measures such as abolishing non-dom tax status and imposing VAT on private school fees.
However, critics argue that last year's increase in National Insurance contributions for employers constituted a "jobs tax" that would ultimately impact workers through reduced wages or potential redundancies.
The shadow chancellor, Mel Stride, condemned the revelations, stating that the "secret tax-rising dossier" demonstrated how the Government planned to "hit the British people with higher taxes". He accused the Chancellor of losing control of the economy.
The Government has maintained that its tax policies would not affect "working people"
GETTY"Rachel Reeves today refused to rule out coming back with more tax rises later this year as the impact of her decisions on the economy worsens," Stride said.
The highlighted that these plans contradicted the Chancellor's previous promises not to seek additional taxes after "spooking markets last year".
"The truth is Rachel Reeves is more than likely to put her hands in the pockets of British taxpayers and business to pay for her mistakes," Stride added.
The Conservatives characterised the dividend tax proposals as Reeves "putting her hands in the pockets of British taxpayers and businesses", despite Labour's electoral pledge.
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