The government is set to have more than £100 billion in new tax revenue for next year in a record fiscal period, equating to around £3,500 per household. This is a turning point in British economic history, when experts issue a stern warning against it—witnessed growth, which led to an unprecedented rise in UK tax revenues.
Notable Tax Plan Highlights
One of the most notable aspects of this tax plan is the relaxation of tax-free restrictions, a plan that will last for six years through 2028. Additionally, businesses are vying for a 6% corporate tax rate, taking it up to 25%—the highest number seen in the last six years.
This development confirms the Conservative-led government’s commitment to a higher tax rate as a percentage of national income, not seen since the 1940s.
At the last general election, the UK share of tax revenue was about 33% of national income. But by the next election in 2024, according to current projections, taxes are set to reach around 37% of national income—a level that hasn’t been sustained in the post-war period.
According to the latest government forecast of tax revenues growing by 4.2% of national income over the period 2019–20 to 2024–25, experts assert, “During World War II, and only then does the surge in government revenue marry the only—or even the most important—cause in recent years.”
They also argue that these tax increases are mainly due to the government’s efforts to devote more money to priority initiatives, such as expanding the NHS workforce, recruiting new police officers, and an unequivocal announcement of austerity in September 2019 to “turn it into a page”.
UK Government Contemplates Inheritance Tax Reform
Chancellor Hunt’s Fiscal Outlook
Despite Chancellor Jeremy Hunt’s likely announcement of tax cuts in the Autumn Speech in November, a result he vehemently rejected, experts warn stating that taxes will raise a parliament over the credibility that any changes announced in the autumn or spring will put a stop to.
Hunt believes the only way to reduce taxes is to control inflation. But inflation has surpassed the government’s target of 5% by the end of the year and is further exacerbated by rising oil prices, now approaching a one-year high of £82 a barrel. This development brings additional stress to UK drivers following a sharp fall in the pound against sterling in recent weeks. It is enhanced by a drop in price.
The fall statement is scheduled for Wednesday, November 22, and is eagerly anticipated as the nation navigates these turbulent economic waters.
