The taxman is set to rake in £1 trillion next year for the first time as household budgets are squeezed by the Treasury
- OBR figures show national debt is on course to surpass £3 trillion in four years
Britain’s tax take will surpass £1 trillion next year for the first time – a stark illustration of the squeeze being put on households and businesses by the Treasury.
Five years from now, the Government’s fiscal watchdog predicts the taxman will grab 45 per cent more in income tax as frozen thresholds drag millions more into paying at higher rates. Wealth taxes will yield an accumulated £257 billion.
And the hike in the corporation tax rate earlier this year will dwarf the impact of the national insurance rate cut announced this week.
The figures show Britain’s soaring tax burden, on course to rise to 37.7 per cent of GDP, its highest level since the Second World War.
Stark figures from the Office for Budget Responsibility (OBR) show debt on course to hit £3 trillion four years from now in 2027/28.
The Office for Budget Responsibility predicts that the Treasury will take in 45 per cent more in income tax as frozen thresholds will mean more will pay higher rates
Figures show national debt is on course to hit £3 trillion four years from now in 2027/28
It comes after Mr Hunt boasted of the biggest package of tax cuts since the 1980s and said he was reducing debt as a proportion of GDP.
Yet figures from the OBR showed the tax take will hit £1.036 trillion in 2024/25, meaning the UK will hit the grim milestone a year earlier than predicted. By 2028/29, it is expected to reach £1.212 trillion.
The HMRC windfall is due to the freeze in income tax thresholds called ‘stealth tax’, as it yields vast sums without the need to state an increase in the headline rate. It sees middle-earners dragged into paying income tax at higher rates as pay rises in line with the cost of living.
Paul Johnson, director of the Institute for Fiscal Studies, said the National Insurance cut ‘pales into relative insignificance alongside the long-term increase in personal taxes created by the six-year freeze’.
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