The tax burden is set to rise to its highest level in over 30 years, according to a report from the Institute for Fiscal Studies (IFS).
The IFS Green Budget 2017, produced in association with ICAEW, shows that around £17 billion of tax rises are planned over this parliament, pushing the tax share of GDP above 37 per cent of national income for the first time since 1986-87.
With Britain’s national debt now at it’s highest level since 1975, austerity will continue into the 2020s, as Chancellor Philip Hammond relies on tax payers to to tackle a £34 billion back hole in his Budget, the report added.
Director of the IFS Paul Johnson, comments: “Cuts to day-to-day public service spending are due to accelerate while the tax burden continues to rise.
“Even so the new Chancellor may not find it all that easy to meet his target of eliminating the budget deficit in the next parliament.
“Even on central forecasts that is going to require extending austerity towards the mid-2020s. If the economy does less well than hoped then we may see yet another set of fiscal rules consigned to the dustbin.”
Households and companies are already experiencing significant tax rises, including higher tax on dividend income, an increase in tax on insurance premiums and a restriction on pension contributions for those on high incomes.
Furthermore, hundreds of thousands of people have been forced into paying the higher rate of tax because the threshold at which it is paid has failed to keep up with rising inflation.
Whilst the tax environment remains convoluted and confrontational, our experts at Beavis Morgan understand the demands placed on individuals and businesses and we work at understanding you, your business and its unique issues, so as to provide the right advice and solutions to help you improve your net worth and increase growth and profitability.
Our diverse team of tax professionals are committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to lawfully exploit tax savings is made known to you, restructuring your affairs in a tax effective and efficient way.
For more information, please contact your usual Beavis Morgan Partner.