IFS Zooms In: The Economy How could the Chancellor raise more tax?
Nov 6, 2025
Stuart Adam, a seasoned tax policy expert at IFS, and Dan Neidle, a tax lawyer and founder of Tax Policy Associates, delve into strategies for raising tax revenue ahead of the Chancellor's Budget. They explore the potential of income tax increases and the implications of freezing thresholds, while debating the fairness of taxing partnerships and reforming self-employed tax bases. The conversation touches on the complexities of landlord taxation and ideas for pension tax reform, ultimately advocating for coherent long-term tax reforms to improve revenue without harming the economy.
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Pledges Make Tax Raising Harder
- Raising taxes is technically easy but made hard by pre-election manifesto commitments.
- Breaking pledges or reforming bases determines how much and what taxes can be raised effectively.
Income Tax Delivers Big Revenue Fast
- Increasing income tax rates is the simplest way to raise large sums quickly.
- A penny on the basic rate yields ~£8bn and 2p across rates could raise ~£15–20bn.
Swap NICs For Income Tax Carefully
- Consider cutting employee NICs and raising income tax simultaneously to respect manifesto wording.
- This swaps a distortionary NIC for a more neutral income tax while raising net revenue.