Doctors could pay £750 more per year in income tax if the Chancellor, Rachel Reeves, increases its rate by 2%, say leading audit, tax and business advisory firm, Blick Rothenberg.
Tom Goddard, a Senior Associate at the firm, said, “Rachel Reeves has given a strong indication she will increase income tax in the Autumn Budget.
“If the basic rate of income tax was increased by 2% a doctor who is on a £60k salary, who currently pays £11,432 in tax would pay an additional £754 per year. Someone on a minimum wage salary of £22,250, who pays £1,936 in tax, would pay £193.6 more tax per year.”
“Although this would break Labour’s election promise of not increasing taxes on ‘working people’, a 1% increase in income tax could generate around £7-8bn extra tax revenue, and a 2% increase could generate £11-12bn. Which would help fill the fiscal black hole, and if spent well in the right areas, could pay off in the long term fiscally and in the public eye.
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Tom added, “However, if there is an increase in income tax rates, there could be a corresponding reduction in employee National Insurance Contribution (NIC) rates.
This would mean there is no overall change in people’s tax position which could cushion the political blow of breaking the manifesto pledge. However, pensioners and those with letting or investment income would lose out as they can’t benefit from a NIC reduction.
This comes as the Prime Minister and the Chancellor have declined to rule out not to standby Labour’s manifesto pledge to raise national insurance, income tax or VAT in the upcoming Autumn Budget.
Sir Keir Starmer said the government will “lay out plans” at the Budget on 26 November as he resorted back to the blame game accusing the Tories over a far worse than thought, of productivity forecasts from the fiscal watchdog.
Starmer has refused to extend the freeze on personal tax allowances which will see more workers paying income tax.
This has sparked concerns that Rachel Reeve’s November Budget will see eyewatering tax rises as the Chancellor tries to plug the multi-billion black hole.
On Tuesday the Chancellor kept avoiding questions when asked if there will be tax rises in the Autumn Budget this month on 26 November.
The Chancellor said, “If we are to build the future of Britain together, we will all have to contribute to that effort.
“Each of us must do our bit for the security of our country and the brightness of its future.”
Reeves was asked over the government’s promises not to increase VAT, national insurance of income tax, she said, “As Chancellor, I have to face the world as it is not the world that I want it to be.
“And when challenges come our way, the only question is how to respond to them, not whether to respond or not. And as I respond at the Budget on the November 26, my focus will be on getting NHS waiting lists down, getting the cost of living down, and also getting the national debt down.
She said he upcoming fiscal statement is “led by this Government style of fairness and opportunity and focused entirely on the priorities of the British people”.
She added: “Protecting our NHS, reducing our national debt, and improving the cost of living. There has been a lot speculation about the choices that I will make, I understand that.
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