A lower than expected borrowing rate could mean that a previously planned national insurance tax rise could be delayed. Since there’s some wiggle room fiscally, could Chancellor Rishi Sunak hold off on the hike that is planned for April?
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
The figure for public sector net borrowing came in at £147bn, £12.9bn under official forecasts by the Office for Budget Responsibility made in October. Coincidentally, there was a £12bn tax national insurance rise planned for this spring to fund the NHS and social care efforts. This presents a perfect opportunity to take advantage of this windfall and cancel the scheduled increase to help UK households combat the cost of living crunch and inflation hitting a record 30-year high in December.
Prime minister says no
Despite pressure to cancel the rise and reports of a ‘wobble’, prime minister Boris Johnson has refused to back down and is currently continuing with the national insurance rise in April.
Sunak and Johnson are set to meet to discuss plans to alleviate the burden of increased living costs, in particular the rising energy bills. Sources insist the NI tax hike isn’t on the agenda since Sunak is aware that if the proposed rise is delayed at all, introducing it at a later date could only cause even more problems, especially as the next general election approaches.
But Sunak has stated that with the risk to public finances, he knows the importance of doing all he can to avoid the financial burden future generations could be saddled with.
Measures to protect vulnerable groups and claw back the costs of the pandemic
It would go against tradition, as chancellors usually raise taxes early in a parliament, and tend to use any fiscal headroom to cut taxes nearer to an election. But the UK is one of only a few European countries that have not introduced any support measures to protect vulnerable groups from higher prices.
Last month, total government spending was down £1bn from the same month in 2020, a savings of £8.2bn from the pandemic job-retention and self-employment support schemes that ended in October. Some of these savings were offset by the additional spending from the NHS Test and Trace programme and the cost of COVID vaccines.
Get all the latest
Be sure to stay up to date with all the latest financial news to ensure you make informed decisions. To discuss the impact of the possible National Insurance tax rise, get in touch with us today.
Can we help with your tax planning?
Investments | Financial Planning | Retirement | Save Tax | Protection |
Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Dental & Medical Financial Services to discuss your options.