News has begun to circulate that the Government intends to increase tax revenue at some point in the future to cover the bill created by the COVID-19 financial support measures that it has launched.
These measures have so far cost the Government more than £300 billion since the start of the crisis, a bill that is likely to increase if the Government is required to extend its measures to keep people safe and businesses afloat.
A recent Treasury document, revealed by The Telegraph suggests that the Chancellor and the Government are looking at many measures to potentially increase tax revenue in future.
This may include raising personal and business tax rates or removing tax reliefs, such as the pensions’ triple lock.
Surrey accountants, TWP Accounting, don’t believe taxpayers should panic now, but they recognise that tax increases may become a reality in future.
Philip Munk, a Partner at the firm, said: “The prospect of tax rises in next year is, in my opinion, very unlikely at this point.
“Everyone realises that given the huge Government bailout, such as the furlough scheme, loans, grants and deferrals of payments, that taxes will have to increase, but raising them too soon would potentially turn a terrible economic climate into a catastrophic one – especially for the nation’s economic backbone, SMEs.
“The economy needs fiscal support right now, and tax rises, whilst inevitable, should be delayed until lockdown and restrictions are fully lifted and the economy has re-opened and recovered.”
The firm is urging businesses and individuals to keep a close eye on future Government announcements and to seek advice if a change to taxation affects them.
Paul Hawksley, Managing Partner at TWP Accounting, added: “Whilst it may not be a popular view, it would seem the fairest way may be an increase in employee national insurance.
“The Government have communicated that the furlough scheme has been provided mostly for those paying national insurance and so it may be workers and their employers who are left to foot the bill.
“Unfortunately, we do not know what direction the Government intends to take and when it may introduce tax rises. Our plea, as a firm that supports so many small businesses, would be to ensure they do not bear the brunt of these costs, as in many cases they have had access to the least support and will find it harder to come through this period of rebuilding and recovery.”