Conservatives chasing votes has left Labour chasing pounds
Labour needs to fill £15.6bn gap
HMRC’s latest stats show that National Insurance (NI) reductions introduced by the Conservatives are causing NI payments to be down £1.3bn each month compared to the previous year.
Joe Neal, Tax Manager said:
The Conservatives in their last few budgets reduced the main rate of NI for employees from 12% to 8% and for self-employed individuals from 9% to 6%. This was a last-ditch attempt to win votes in the election. But has now left Labour with a headache of how to fill the gap.
HMRC’s latest stats released today reveal that the NI takings for the first 2 months of the 2024/25 tax year are £2.65 bn less than the first 2 months in 2023/24. The takings in April and May 2024 were £25.1 bn compared to £27.7bn in the April and May 2023. Overall this means that NI takings are £1.3bn down each month compared to the previous year. Extrapolated out this could be £15.6bn over the course of the year that Labour will have to find from somewhere. Labour have already pledged not to increase income tax, NI or VAT so it remains to be seen how this hole will be filled.
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