01494434544 info@pwwpl.com

Who will Pay the Bill for Covid-19?

30th September 2021

Government borrowing is at its highest level since the Second World War. Whilst this is understandable, we have to acknowledge that this debt has to be addressed. The recent announcement concerning increasing National Insurance Rates to cover some of the shortfall in NHS and Social Care costs highlights that the government has already started the ball rolling, but what else needs to be done to manage this situation?

At some point, the Chancellor has to start paying the money back and it is clear that he will need to do more than simply raise National Insurance levels. So just who will pay the bill for Covid? And how long will they be paying the bill for? 

 It hardly sounds like a prudent way to run a country but perhaps the UK will never pay back the debt. In the last 100 years the UK has never not been in debt: in the last financial year (before Covid struck) the government was planning to borrow £160bn – of which £100bn was to pay back old debt. It must be acknowledged that government borrowing is not like a credit card: the debt (at least according to the experts) does not need to be reduced as quickly as possible. Borrowing is cheap at the moment, with interest rates at historic lows – so low that early last year the government issued negative-yield bonds. Effectively, institutions that bought the bonds were paying the government to look after their money. 

Naturally, the debt must still be acknowledged, and we do expect tax revenues to rise in due course. The use of ‘stealth tax’ is always a way of raising revenue without ruffling too many feathers and we saw that idea being used in the last Budget. Many allowances including Personal Allowances, Pension Lifetime Allowance and Inheritance Tax thresholds were all frozen until 2026. The principle behind this is that inflation causes both income and prices to rise, pushing everybody into a potentially higher tax threshold of some sort.

Making good use of these allowances is something that we often discuss at review meetings, so therefore freezing these allowances will inevitably have implications. For example, significant house price rises along with a frozen Inheritance Tax allowance could affect many of our clients. Frozen personal allowances could also mean higher than expected income tax bills.

Freezing allowances has raised revenue historically and will certainly build up the Revenue coffers in the long run, but it cannot be the only solution to repay this level of debt. Our expectation is that the Chancellor’s emphasis will be on servicing the debt, rather than paying it back, especially with interest rates remaining at an historic low. It is important to note that this is not expected to be similar to the austerity measures that were put in place after 2008. The Chancellor will be keeping his fingers crossed that the predicted rebound in the economy really does happen, finally starting to swell the tax revenue, especially with the forthcoming increase in Corporation Tax.

We expect to know more about the debt and the management of it at the end of October when we have the Autumn Budget Statement, but the increase in National Insurance shows that a process is now in full swing. In the long term, we all have to recognise that there is a bill to pay for Covid 19.  

ABI Guide - Health and safety for small/medium sized businesses

Good health and safety standards help you to run your business successfully.

Aviva Motor Fleet Advice

Employers are legally responsible for employees who drive whilst at work.

Budget 2013

The 2013 Annual Budget Statement painted a somewhat bleak economic picture, alleviated by a few crowd-pleasing bright spots.

Budget Summary

Despite some speculation that Budget 2012 may have brought some unwelcome surprises in the

Charity Fundraising by PWW

This year for the first time, staff at P W White and Partners attended the Amersham carnival on 13thJuly in the glorious weather with temperatures of over 30 degrees C.

Dilnot Report on Long Term Care

Since 2004, the number of Britons aged over 85 has risen by two-thirds, and demand for care has outstripped supply. The UK's elderly population will continue to expand.

Disclosure of all the facts

Are you aware of yourresponsibility to disclose what is considered ‘material’ information inrelation to your Insurances?

Driving Licences and Driving Other Cars Third Party

If you are aged under 70 the chances are that your licence has not expired as driving licences generally expire at 70 unless extended.

Flood Advice from insurers

Insurers risk surveyors have been busy visiting the impacted areas across the UK and one of them yesterday in a flood

Floooding and Commercial Premises

Recent flooding events experienced across the UK, particularly over the last decade, have shown the devastating impact that flooding can have on property, businesses and individuals.

GAP Cover for new & used Cars

P W White & Partners Ltd now have the facility to provide GAP cover when you purchase a new or used (up to 7 year old) car from a dealer.

Have you provided your ELTO details?

ELTO is the Employers Liability Tracing Office which was set up so that all businesses (subject to a few exclusions)

Important information that could affect the validity of your cover

Any intended alteration or extension to your property – personal or commercial, i.e. creating an additional bedroom, bathroom or shower room

Intestacy changes from 1 October 2014

The Inheritance and Trustees' Powers Act 2014 announced some key changes to the intestacy rules.

Motor Insurance Database

If you run a motor fleet have your details been entered on the MID?

NISA New ISA

From July 1 2014 all ISAs will become New ISAs (NISAs).

Paper driving licence changes

From January 2015, the DVLA will no longer issue the paper counterpart to the photocard driving licence.

Pension Lifetime Allowance Limit (LTA)

In 2006 the Government introduced a cap on the value of Pension Pots.

Tax Disc Changes

The new rules, which came into effect on 1stOctober 2014, mean it will no longer be possible to transfer tax when a vehicle is sold.

What is the Retail Distribution Review (RDR)

The implementation of the Retail Distribution Review (RDR) is one of the biggest overhauls of financial regulation since the Financial Services Act of 1986.

Whiplash Reforms

The first stage of the government’s whiplash reform programme was introduced on 1st October 2014

Why to use an Independent Financial Adviser

You may have noticed the recent media coverage following the findings by Which?

Your choices at retirement

When you reach retirement age, with interest rates at historic lows, your most important choice will probably be between

 FSB member logo   Link to Cobra Network website        Click here for the BIBA website

P W White & Partners Limited is authorised and regulated by the Financial Conduct Authority. Financial Services Register No: 126673 http://www.fca.org.uk/register.

P W White & Partners Limited Registered Address: Suite 1, Sycamore House, 1 Woodside Road, Amersham, HP6 6AA. Registered in England & Wales, No. 933961.

Neither P W White & Partners Limited nor its representatives can be held responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The Financial Conduct Authority does not regulate National Savings or some forms of mortgage, tax planning, taxation and trust advice, offshore investments or school fees planning.

The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk.

The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at consumers based in the UK.

Please read our Privacy Statement before completing any enquiry form or before sending an email to us.