Chancellor Rishi Sunak is aiming to raise £6billion tax by freezing personal income tax allowances, and could announce the measure in March’s Budget. The UK has avoided a double dip recession, but has still endured its biggest annual decline in 300 years. The Office for National Statistics (ONS) said GDP slumped by 9.9 percent in 2020, the biggest fall since 1709 when Britain was hit by the Great Frost and the economy contracted by 13 percent. A one percent growth in the final quarter of 2020 meant the UK just avoided a double dip recession, but Mr Sunak is still contemplating various tax hikes in order to raise funds.
The Telegraph reported last week that the Chancellor could abandon annual increases to the £12,500 and £50,000 income tax thresholds.
This could leave tens of millions of Britons handing more money to the Government.
This scenario if described as a “stealth tax” if other duties are not hiked.
Andrew Griffiths, a former Parliamentary Under Secretary of State at the Department for Business, said of the plans: “In a world where tough choices will have to be made, the best form of those are ones that are the most broadly based.
“A freeze in allowances would be amongst them.”
Richard Murphy of Tax Research UK warned against tax increases in an interview with Express.co.uk last year.
He said: “At first, Rishi Sunak completely underestimated what was going to happen, it was a complete disaster, because he hadn’t realised how disastrous coronavirus was going to be.
“But he was back a week later with the furlough scheme, it was smart, quick, some people lost out when they shouldn’t have done.
“Now Sunak’s obsession with debt is kicking in again.
“If he opts for austerity and tax hikes, then frankly we are heading for depression rather than a recession.”
Andy Chamberlain, Director of Policy at The Association of Independent Professionals and the Self-Employed (IPSE), told Express.co.uk that SEISS rules need to be changed to enable more self employed workers to get help from the Government.
He said: “We are calling on the Government to include these people in the next round of SEISS, because they would have done a tax return by now.
“Because they have done that, HMRC has the information it needs in order to process those grant payments.”
Mr Sunak’s Eat Out to Help Out policy has also been scrutinised, as economists from the London School of Economics found its impact was minimal.
Only 25 percent of food businesses eligible used the scheme, and footfall was only boosted by 5.7 percent in cafes and restaurants.
The Treasury also recently revealed the scheme cost taxpayers £849million after soaring over budget.
Published at Wed, 17 Feb 2021 09:10:00 +0000