UK tax increases will begin in April and continue for at least the following two years. Tackling the pandemic has led Chancellor of the Exchequer, Rishi Sunak, to borrow over £316bn as of January 2021, bringing the national deficit to nearly £2,114.6 billion, the highest ever peacetime total.
In 2020, the government has spent a staggering amount on measures to fight COVID-19 and its impact on the economy. As of December 2020, that includes £46.4bn for measures to support jobs through the Furlough scheme, where the government pays most of the wages of employees who cannot work. The NHS and other public services have been given £127bn extra to combat the pandemic, and £66bn will be spent on grants and loans to support businesses. The government will also raise £100bn less tax than it hoped because of the crisis due to unemployed or furloughed workers paying less income tax, businesses paying less tax if their profits are lower and shoppers paying less VAT if they buy fewer things.
It was originally reported in September 2020 that former UK chancellor, Philip Hammond expected the government to refrain from any “significant” tax rises until after the 2024 general election, but the eye-watering borrowing figures puts that prediction in doubt.
If you require any more information on tax increases or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.
