General Election 2024
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Tax

Hiding in plain sight

The Government’s record on taxes and the challenges ahead

Adam Corlett
Adam Corlett

In this briefing note – part of a programme of outputs supported by the Nuffield Foundation to put the upcoming UK general election in context – we consider some of the key tax questions for the 2024 general election and beyond. Has the government raised people’s taxes or lowered them? How different are the parties’ implied tax plans? And what is likely to happen in the next parliament?

Key findings

  • The 3.3 percentage point rise in the tax-to-GDP ratio between 2019-20 and 2024-25 is the largest increase of any post-war Parliament, and takes it to its highest level since 1949, at 36.5 per cent. The rise is equivalent to over £90 billion of additional taxes – or over £3,000 per household – in 2024-25. But it still leaves the UK’s tax-to-GDP ratio below that of almost all western and northern European countries.
  • Despite the aggregate tax take rise, it is not the case that everyone’s taxes are up. Thanks to the Income Tax personal allowance increases of the 2010s and the most recent Parliament’s big National Insurance cuts, personal taxes are now historically low in many ways. If effective tax rates had remained at their 2010 level, the typical employee in 2024 would be paying £1,600 more Income Tax and National Insurance. But those on higher incomes have tended to see a rise in effective tax rates over the past fifteen years.
  • Although some material differences in tax policies have emerged during the general election campaign, these are smaller than the set of tax rises for the next parliament that have already been announced by the Government. These will amount to a net tax rise of around £23 billion a year by 2028-29 – or around £800 per household on average.
  • There are also grounds to expect even more tax rises in the next parliament. First, today’s particular fiscal circumstances look extremely challenging for a range of reasons, not least that spending on public services would need to be £19 billion a year higher than has been pencilled in if further cuts to unprotected departments are to be avoided. Second, history tells us that taxes rise after elections. On average over the past eight general elections, the first two fiscal events of each parliament have featured new policies that have raised taxes by a net £21 billion.
  • However, the backdrop of big tax rises in the last parliament, £23 billion of post-election tax rises already announced, and both main parties explicitly committing to not raising the key taxes, could narrow the room for manoeuvre when it comes to announcing any further tax rises.

Further reading

More, more, more
Putting the Autumn Budget 2024 decisions on tax, spending and borrowing into context
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Camron Aref-Adib, Mike Brewer, Molly Broome, Tom Clark, Alex Clegg, Nye Cominetti, Adam Corlett, Emily Fry, Sophie Hale, Lindsay Judge, Zachary Leather, Jonathan Marshall, Charlie McCurdy, Louise Murphy, Felicia Odamtten, Cara Pacitti, Simon Pittaway, Hannah Slaughter, James Smith, Greg Thwaites, Lalitha Try
Great expectations in hard times?
Previewing the big decisions for the Chancellor in the new Government’s first Budget
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Emily Fry, Cara Pacitti, James Smith
The growth mindset
Sizing up the Government’s growth agenda
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Emily Fry, Greg Thwaites
Adam Corlett
Adam Corlett Principal Economist