22 June 2018
The Chancellor of the Exchequer, Philip Hammond, has signalled that tax rises are on the cards in the next Budget in order to pay for an increase in spending on the NHS announced on 17 June 2018.
Additional funding of £20bn a year in real terms was pledged in England alone, leading to debate over how it would be paid for. Now Mr Hammond has seemingly ended that conversation, stating “across the nation taxpayers will have to contribute a bit more in a fair and balanced way support the NHS we all use”.
Polls have showed that at the end of 2017, 61% of voters were in favour of increased taxation for the UK’s health service, and it would appear that the Government has taken this public opinion on board. However, it does leave Mr Hammond with some tricky calculations to make as he tries to balance this with his pledge to reduce the nation’s debt.
Inevitably there will be speculation as to where the increases will be made. Suggestions in the press include a cancellation of proposed corporation tax reductions and a freeze on Personal Allowances, whilst the Chancellor has previously tried to increase National Insurance on the self-employed and may well revisit this. When tax changes are mooted restrictions on higher rate relief for pension contributions and on Entrepreneurs’ Relief will always be part of the conversation, but this Chancellor and his predecessor have so far shied away from these.
What is certain is that November’s Budget will now be anticipated a little bit more keenly – and the Treasury has plenty of hard work to do beforehand.