Reform UK Taxation Paper by Stanley Jackson

In Ayrshire Pullman Motor Services & Ritchie v CIR ((1929) 14 TC 754) Lord Clyde remarked:

“No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores. The Inland Revenue is not slow – and quite rightly – to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Revenue”.

Income expected from taxation by Government for 2025-26 in billions

Income Tax                                      £329

VAT                                                     £214

NIC                                                     £199

Other taxes **                                £128

Other non-taxes *                         £125

Corporation tax                              £105

Council Tax                                      £  50

Excise duties                                   £  46

Business rates                                £  34

£1230

** Includes fuel duty £25 billion, Inheritance Tax £9 billion, alcohol, tobacco, vehicle taxes.

* Local authority, housing, student loan interest …

Expenditure in 2024/25 was £1285.60 billion, including £105 billion on interest on gilts, including QE.

For 2025-26 ….. ? Who knows? One estimate by Statista.com is £1347 billion.

Here are just two examples:-

1             £313 billion will be on welfare rising to £373 billion by 2029 – 30 including PIP of £27.4 billion.

2             £182 billion will be on the NHS or £280 billion including social care.

CONCLUSION

Unless the economy grows these figures are unsustainable . Reeves needs to increase income tax or borrow even more. Either route is yet another U turn, resulting in a debt level of over 100% of GDP and rising.

OUR CHALLENGE

We need to demonstrate our policy offering makes economic sense. The city needs to be convinced we are competent. This can be achieved by commissioning a relevant report from Roger Bootle.

OBJECTIVE

To show how cutting taxes increases revenue. Our campaign should be to simplify taxation by making it fairer. It is the Laffer Curve for beginners. There is more than one way of doing this.

Stanley Jackson

13 July 2025

Our thanks to Stanley Jackson for giving us his interesting and provocative thoughts on the UK government’s finances at our branch meeting on September 16th.