Economists have warned of another potential multibillion-pound national insurance raid in the upcoming autumn Budget, as Chancellor Rachel Reeves grapples with a £30bn fiscal deficit.
According to Oxford Economics researchers, a mix of changes to National Insurance Contributions (NICs) and income tax rules could generate an additional £15bn in tax revenue, as reported by .
The probable measures include:
READ MORE: {}
- Continuing the freeze on income tax allowances and NICs thresholds until the 2029/30 tax year, pulling more employees into higher tax brackets and generating an extra £10bn;
- Implementing a new rate of NICs on private companies' contributions to employee pension schemes, which are currently exempt from NICs, raising £2bn;
- Expanding NICs rules to encompass landlords, raising £2bn;
- Extending NICs rules to cover Limited Liability Partnerships such as law firms and investment funds, who currently don't pay the tax, raising £1bn.
These potential changes come after a significant NICs rate at last year's Budget, which increased employer NICs rates and reduced the tax-free threshold, adding billions in costs for major employers in sectors like retail and hospitality.
However, Oxford Economics suggested that Reeves is likely to refrain from increasing income tax or NICs rates, actions that would breach Labour's manifesto pledges.
"We regard a freeze in income tax allowances and NICs thresholds a near certainty," said Michael Saunders, senior advisor at Oxford Economics."
"[But] in our view, it's highly unlikely that the Chancellor will lift the main rates of income tax, VAT, employees' NICs or corporation tax, given Labour's manifesto commitments."
"Another rise in employers' NICs is also unlikely, because of the adverse effects of employment and inflation of last year's hike. Rather, the emphasis will be on broadening the tax base [and] cutting tax allowances."
Banks prepare for windfall levies
Most Read
An increase in "sin taxes" such as higher duties on gambling was also probable, Oxford Economics suggested, alongside a fresh windfall levy on banks, with both measures generating a total of £8bn.
Up to £5bn could additionally be secured through altering pension tax arrangements, including establishing a flat 30 per cent rate for tax relief on pension contributions and reducing the tax-free lump-sum pension ceiling to £100,000.
The amounts Reeves must generate will partly hinge on productivity projections from the 海角视频's fiscal watchdog, which has historically adopted a more positive outlook than other leading forecasters.
"Financial market concerns regarding the 海角视频's fiscal outlook may ease somewhat, due to the Chancellor's readiness to implement tax increases and some spending controls to remain within fiscal parameters," Saunders noted. "However, worries over the 海角视频's fiscal outlook will probably not be fully assuaged unless or until the 海角视频 can show it's on a solid path to fiscal sustainability."