The Treasury accounts for up to this April show measures likely to have indirect or longer-term effects on employment opportunities, economic growth, and the overall cost of living.
From simplification efforts to major policy changes like National Insurance cuts and full expensing, tax remains a key lever for the government in pursuing its objectives of sustainable public finances, economic growth, and international competitiveness.
The HM Treasury Annual Report and Accounts for 2023-24 show that as ongoing economic challenges and opportunities emerge, the tax system will evolve with the Treasury continuing to focus on tax simplification. The department supported the delivery of tax simplification packages at both the Autumn Statement in November 2023 and the Spring Budget in March 2024. Starting with the removal of the Office of Tax Simplification (OTS) in July 2023 marked this shift in approach. Rather than having a dedicated office, tax simplification efforts are now integrated across Treasury teams.
In addition to simplication there is a highlighted approach to minimising the tax gap, the difference between the expected tax revenue and actual received. Highlights include:
- The Treasury continues to work on improving the effectiveness of Money Laundering Regulations, balancing the need to "reduce burdens for legitimate businesses and customers while better protecting the UK from economic crime."
- The report mentions the Treasury's role in "managing and mitigating risks to the UK's tax base," suggesting ongoing efforts to combat tax avoidance and evasion.
- The creation of the Public Sector Fraud Authority, which has dual reporting to HM Treasury and the Cabinet Office, may play a role in tackling tax fraud.
The report shows a significant increase in the Capital AME budget for 2024-25 and this suggests expectations of increased capital expenditure or investment. This could potentially relate to major infrastructure projects, financial interventions, or other large-scale capital programs that fall under Annually Managed Expenditure. The rise here could have implications for future tax policy, as it may influence overall government borrowing and fiscal strategy.
Other factors that could impact tax policy include:
- Ongoing work to deliver on legal obligations to reduce emissions to net zero by 2050 may necessitate changes to environmental taxes or incentives.
- The continuing response to global economic uncertainties, including the aftermath of the pandemic and geopolitical tensions, may require tax policy adjustments.
- Exploration of a potential "digital pound" by the Bank of England and HM Treasury could have future implications for tax administration and the broader tax system.