The Treasury has stated it will not know how much last year’s tax increase raised until at least next summer.
Ringfenced for healthcare, the 10% hike in the higher rate of income tax was estimated to generate around £20 million, but the true figure won’t be known until all 2024/25 tax returns are assessed.
Responding to a question from Douglas North MHK John Wannenburgh, Dr Allinson said that while Income Tax Instalment Payments for employed taxpayers have risen broadly as expected, the exact impact of the rate change cannot be determined until full tax returns are submitted.
“The Income Tax Division do not have the details as to a taxpayers overall income and therefore are unable to determine the income on which the ITIP has been paid,” he said.
Dr Allinson added: The increase in the prescribed rate from 20% to 22%, announced as part of the 2024/25 Budget, was part of the reason the Treasury was able to uplift the Manx Care mandate by £43.8m in 2024/25.
“Moreover, the fact that DHSC are looking to request a supplementary vote in excess of that additional funding further highlights that any amount generated as a result of the increase in the prescribed rate of income tax from 20% to 22% has, having been initially ring-fenced for health care, helped to offset some of those costs in year.
“The decrease from 22% to 21% is expected to reduce revenue by approximately £10 million, however it is worth noting that if the increase from 20% to 22% generated more than £20 million, the decrease from 22% to 21% will also be greater than the estimated £10 million.”
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