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(Bloomberg) -- Chancellor of the Exchequer Jeremy Hunt is considering increasing the headline rate of capital gains tax as he and Prime Minister Rishi Sunak seek ways to plug the UK’s fiscal hole. 

Hunt, who will deliver a major economic statement on Nov. 17, is also looking at cutting capital gains tax allowances and reliefs, according to two officials familiar with the matter who spoke on condition of anonymity because no final decisions have been made. A Treasury spokesperson said they wouldn’t speculate on tax changes.

The government says no options are off the table as ministers seek £50 billion ($56 billion) of spending cuts and tax rises to stabilize Britain’s public finances, which face growing demands due to inflation at a 40-year high, stalling growth and a squeeze on the cost of living. Other potential measures include raising more from taxes on dividends and windfall profits of oil and gas firms, and real-terms cuts to departmental budgets.

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The Hunt package will come amid a bitter economic backdrop for the UK, with the Bank of England predicting a long recession and the economy potentially shrinking 1.7% over 18 months. That creates a major political challenge for Sunak, who has to call a general election by Jan. 2025 at the latest and whose Conservative Party already badly lags the opposition Labour Party in the polls.

‘Inevitable’ Tax Rises

Hunt and Sunak are trying to strike a message of fairness with their economic plans: A Treasury readout of their meeting earlier this week said they agreed “those with the broadest shoulders should be asked to bear the greatest burden.” Though they also said it would be “inevitable” everyone would need to pay more in tax.

Capital gains tax, which is levied on profits from the sale of assets, is expected to raise £15 billion in the current tax year, according to the Office for Budget Responsibility. That’s about 1.5% of all UK tax receipts.

Rates of capital gains tax range from 10% to 28%, depending on the income of the taxpayer and the type of asset sold. There is currently a £12,300 tax-free allowance for individuals. A one percentage-point increase in the main higher rate of capital gains tax would be worth about £145 million according to Treasury estimates.

The government’s Office for Tax Simplification in 2020 recommended overhauling the levy to align it more closely with income tax rates, saying that “in theory” such a move could be worth 14 billion pounds, but in practice it was likely to be lower because of behavioral changes such as people delaying disposals.

The potential changes to capital gains tax were first reported by the Telegraph late on Thursday. Earlier on Thursday, Bloomberg reported that Hunt is considering cutting the tax-free allowance for dividend income, which is currently set at £2,000. A £1,000 reduction in the allowance would be worth about £455 million a year to the exchequer, according to Treasury calculations.

Hunt is also expected to extend a current freeze on income tax thresholds and allowances, which will drag more Britons into higher rates of income tax in the years ahead due to high inflation.