Sajid Javid is considering a tax raid on higher earners in his March budgets to help fund Boris Johnson’s plan to “level up” the economy.
The chancellor is said to be committed to making the tax system “fair and efficient”.
Insiders have told the Financial Times, Javid is weighing up reforms that would hit the better off and ease pressure on public finances.
Pension tax relief is among the systems under scrutiny. It currently costs the £40bn a year in foregone income tax revenues.
Currently, those paying into a pension receive tax relief at the same rate as their income tax rate.
Javid and the Prime Minister are working to implement the promises in their election manifesto to remove “arbitrary tax advantages for the wealthiest in society”.
No final decisions have been made regarding the 11 March Budget.
The government is reportedly at risk of failing to meet its fiscal rule to secure a balanced budget on day-to-day spending by 2023.
The Treasury told the FT: “We don’t comment on speculation. All taxes are held under review and any changes are announced by the chancellor at the Budget.”
Reforms under consideration include pension tax relief, inheritance tax, entrepreneur’s relief and capital gains tax.
A planned cut to corporation tax from 19 per cent to 17 per cent has already been scrapped by Johnson.
Javid has also signalled he will reduce the entrepreneur’s tax relief, which will cost the Treasury an estimated £2.1bn in 2019-20.