New taxes rake in £50bn for HMRC ahead of National Insurance rise
Charges including the bank levy and sugar tax have proven ‘successful’ in bringing in billions of pounds quickly, according to analysts
New levies imposed on businesses over the last decade have raked in more than £50bn for the Treasury, as the UK’s tax burden rises to its highest level since the 1950s.
The bank levy, apprenticeship levy, soft drinks tax and a range of other charges have all contributed to the public purse, according to analysis by Thomson Reuters.
It comes as National Insurance is set to rise in April, adding 1.25 percentage points to the tax levied on employers and on their workers’ pay packets.
Jas Sandhu Dade at Thomson Reuters said it is a tough time to add to the burden on taxpayers.
She said: “Adding new taxes and placing a heavy burden on businesses comes at a difficult time for those still recovering from the economic impact of the pandemic.
“These new taxes have proven themselves to be a successful way to bring in billions of pounds in a relatively short space of time. The new National Insurance surcharge is sure to be a success from a public purse perspective, but will add considerable financial and compliance stresses to both businesses and individuals.”
The extra National Insurance fee, which will be known as the health and social care levy from 2023-24, is set to raise around £17bn per year, outweighing even the largest of the previous new taxes.
The bank levy is the biggest contributor among the previously introduced taxes, according to Thomson Reuters, snaffling almost £25bn from lenders since it was introduced in 2011 as a charge based on the size of finance giants’ balance sheets. The apprenticeship levy is next, taking £10.7bn from big employers, followed by the bank corporation tax surcharge, which came into force in 2016 to stop financiers benefitting from cuts to corporation tax. It has raised £8.2bn.
Also significant are the bank payroll tax, an annual tax on enveloped dwellings, a one-off levy under a tax deal with Switzerland, and the diverted profits tax.
At the same time, the Confederation of British Industry called for the investment superdeduction to be made permanent, instead of ending in 2023.
Extending the tax relief could boost business investment by 17pc, or £40bn, per year by 2026, the industry group said.
Tony Danker, the CBI’s director general, said the temporary policy appears to be “a real success” so far, and so should stay in place.
He said: “It’s started the job, but cannot be a one-hit wonder. Evolving the policy from short-term fix into long-term strategy will give firms confidence that Government and industry are aligned.
“The UK is facing the highest tax burden in decades. But by rewarding firms who put money into their operations, we can unleash new innovation and productivity – the ingredients we need to escape the low-growth trap and build a stronger, sustainable and more equitable economic future.”
A Treasury spokesman said: “The Chancellor announced the super-deduction last March to unlock business investment to spur our economic recovery from the pandemic – and the CBI’s analysis reflects this. The super-deduction is helping to power our recovery, and we are the fastest growing economy in the G7 this year.
“The tax system has an important role to play in boosting business investment and innovation, which is why we offer a suite of world-leading incentives, including R&D relief, the Annual Investment Allowance £1m cap and the lowest corporation tax rate in the G7.”
New taxes rake in £50bn for HMRC ahead of National Insurance rise.
Source : Telegraph