Labour has outlined plans to fund NHS policies and school breakfast clubs by cracking down on tax dodgers. Shadow chancellor Rachel Reeves has pledged to provide officials with up to £555m to improve tax collection, which could raise £5.1bn per year. The party needed to find a way to plug a gap in its spending commitments after the government adopted its plan to scrap non-dom tax status. Previously, Labour had planned to pay for flagship pledges including £365m for free school breakfast clubs and £1.6bn for more hospital and dental appointments by replacing the UK’s current non-dom tax regime.
Despite the government having adopted Labour’s plan, Chancellor Jeremy Hunt changed non-dom tax rules to pay for a cut to National Insurance. Labour was left with a funding gap and faced questions on how it would fund its existing promises. Reeves stated last month that she would “go through every pound” in the government’s spending plans to find money for the policies. She has now set out her alternative plan, which also includes strengthening the government’s proposed replacement of non-dom rules.
If Labour wins power, the party would remove a 50% discount in the first year of the new rules and include foreign assets held in a trust within UK inheritance tax. The party claims these changes could bring in £1bn in one year, rising to £2.6bn over the course of the next Parliament. Labour would also provide HM Revenues and Customs (HMRC) with the “resource it needs to go after those who are avoiding or evading tax, and to modernise the tax office so we have a system that is fit for purpose”.
Labour cited HMRC figures revealing that the gap between the amount of tax owed and the amount the government actually collected equated to £36bn in 2021-22. The party also referred to a recent Financial Times interview with the head of the spending watchdog, the National Audit Office, who said the government could save £6bn per year by tackling tax evasion and avoidance. Labour proposes to invest £555m in increasing the number of tax officers to work on investigations and tackle fraud, and digitising the tax office to improve customer services, raising £0.7bn in 2025-26 and possibly £5.1bn annually by the end of the Parliament
Read the full article from The BBC here: Read More