A confidential Treasury assessment of the coronavirus crisis estimates it will cost the Exchequer nearly £300billion this year, according to The Telegraph. In the document, it’s suggested that required measures could include a rise in Income Tax, the axing of the triple lock on state pension uprating, as well as a two-year public sector pay freeze.
Asked whether the triple lock will remain, a No 10 source said: “It’s too early to speculate about any future decisions.
“We’re facing a time of unprecedented economic uncertainty and we remain committed to the agenda that was set out in the Budget.”
Mike Hodges, partner in the Private Wealth team at Saffery Champness, has shared his thoughts on what could potentially happen in the aftermath of the pandemic.
He said: “With every new measure announced by the Government to alleviate the strain of Coronavirus on businesses and individuals, and with every passing day that those measures are in effect, the pressure mounts on the Chancellor to account for how the country will pay for the debt being incurred.
“Some have found comfort in the idea that we have been in this position before and draw comparisons between the economic impacts of the pandemic and that of the global financial crisis of 2008.
“However, when it comes to the issue of paying off the debt and the question of who should bear the brunt of the seemingly inevitable tax hike, there are few useful parallels. There was appetite in the aftermath of the financial crisis to punish bankers and the financial industry for what was perceived to be reckless behaviour.
“There is no similar public moral compass for the government to use this time, although there may be some hungry looks cast by the Treasury in the direction of the global technology giants.
“This time around, the pressure is likely to come from a different direction with the Chancellor being under an obligation to protect from tax increases those low paid workers who have been at the frontline in the fight against coronavirus in the health, social care and other sectors.
“We may well see additional and potentially cross-jurisdictional attempts to squeeze more tax out of the global tech businesses who, on the one hand, have simultaneously helped economies and individuals sustain themselves during the lockdown, but which have also secured huge profit from doing so, sometimes at the expense of domestic businesses which are currently unable to trade.
“And while we may see rhetoric from the Government on further cracking down on tax avoidance to help balance the books, a subject which always plays well in the court of public opinion, this isn’t likely to raise the sorts of money the Chancellor will need.
“Large scale tax avoidance schemes have been consigned to the history books with HMRC having an increasingly sophisticated toolkit at its disposal to hunt out non-compliance, working with countries around the world to do so.”
However, it may also be that individuals could face being hit by increased taxes.
For Mr Hodges, changes to the National Insurance rules for those who have reached state pension age is an example, which “wouldn’t be a surprise,” according to him.
“The government may also be looking at potential tax hikes for individuals. For example, it wouldn’t be a surprise to see NIC introduced for people over state pension age,” he said.
“The government may consider this a relatively uncontroversial tax, as NIC goes towards funding the individual’s entitlement to state pensions, so could be seen as swings and roundabouts for people of pensionable age who are continuing to earn a salary.”
Currently, an individual does not pay Natinal Insurance after they reach state pension age, unless they’re self-employed and pay Class 4 contributions.
Those who are in this latter situation will stop paying the contributions at the end of the tax year in which they reach state pension age.
While it’s not known what changes may be ahead following the coronavirus crisis, Britons have shared their thoughts on the suggestion.
Responding to the reports, some Britons were left disgusted.
Commenting on the Express.co.uk Facebook page, Iain Pickup wrote: “It was always going to be us that paid the bill. The working and retired public.”
Meanwhile, John Cook penned: “The state pension has been reduced to a handout, nobody can survive on it, needs to be tailored to an individual’s circumstances.”
Carol Pope commented: “Make the businesses pay more. Cut MP expenses etc. Always OAP – many struggling now.”
Meanwhile, other readers shared their thoughts on what may happen in the aftermath of the coronavirus crisis.
This included the speculation of changes to the state pension age – something which is currently rising.
Derek Malone wrote: “They’ll probably raise the pension age again to save money.”
However, others pointed out that the Chancellor may need to make controversial changes in order to give the economy a boost.
Elizabeth Ball commented: “If that’s what got to happen to help the economy going then so be it.”
Mr Hodges also suggested that it may be that a new tax is introduced.
He said: “If the government finds itself in a position where it believes that new taxes are the best option for debt reduction, we may see the re-emergence of the notion of some kind of wealth tax.
“However, the government will be aware this would likely prove more controversial than simply increasing tax rates on income, as this has been the first port of call for any UK government looking to rapidly increase tax revenue since the introduction of income tax as a temporary measure to cover the cost of the Napoleonic Wars.
What with the need to increase tax revenue significantly, and the desire to ensure the country remains a hospitable and attractive business environment on the world stage post-Brexit, the Government is firmly between a rock and hard place when it comes to tax policy.”