News | Legal News

06 March 2017

Tax rises likely to be on agenda for Chancellor’s Budget

Philip Hammond is expected to announce tax rises as part of his 2017 Budget this Wednesday.

The Chancellor has stressed the need for caution as the UK embarks upon uncertain political conditions, amid reports that he is planning to raise taxes rather than loosen the public purse strings.

And despite an unexpected rise in tax receipts for the last financial year, Mr Hammond says this money will be kept as a reserve, rather than providing a much-needed boost to services and infrastructure funding.

He told the BBC's Andrew Marr Show: "It's not money in the wallet because we are borrowing a huge amount of money. Remember, we have over £1.7 trillion worth of debt. This isn't money in a pot. What is being speculated on is whether we might not have borrowed quite as much as we were forecast to borrow.

"If your bank increases your credit card limit, I don't think you feel obliged to go out and spend every last penny of it immediately."

Potential NI rise

The Financial Times reports a potential rise in the self-employed National Insurance class 4 rate by 3%, which could raise up to £1 billion as it equalises the tax rate with employees at 12%.

Although the Treasury has declined commented on the suggestion, the newspaper reports, this could be one way Mr Hammond will meet last year's pledge to "consider how we can ensure the taxation of different ways of working is fair between different individuals".

RSA Chief Executive Matthew Taylor is leading an independent review into employment practices and modern business models.

He told the FT: "It's important that the chancellor continues to explore the long-term sustainability in the way we tax employment and labour, as he started doing in last year's Autumn Statement."

Mr Hammond is also facing mounting pressure to deal with the gap in funding for elderly social care, and soothe the Tory backlash against business rate reform.

New rules on business rates means some firms' tax bills will double in the next 12 months, while the introduction of a business rate relief scheme is expected to leave a £2 billion hole in this year's Budget.

Simon Deans

Simon Deans

Tel: 01753 279022

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