UK Covid cost: How much will the pandemic cost? How much will taxes go up?

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The Treasury has spent billions throughout the coronavirus pandemic keeping the UK afloat through schemes such as furlough and business loans. Two new reports have exposed the “significant financial risks” that could be on the way for the taxpayer. The reports, on the response by Prime Minister Boris Johnson’s government to the COVID-19 pandemic, parliament’s Public Accounts Committee (PAC) said lessons needed to be learned before a promised public inquiry due to be held in 2022.

The PAC said there have been unacceptably high levels of wasteful spending, with 2.1 billion items of unusable PPE purchased – equating to £2 billion of wasted public money.

A Department of Health and Social Care spokeswoman responded: “There are robust processes in place to ensure that government spending always provides value for money for the taxpayer.

“We have worked tirelessly to source life-saving PPE to protect health and care staff, and we have delivered over 12.7 billion items to the frontline at record speed.”

Meg Hillier, the PAC chair, said: “With eye-watering sums of money spent on COVID measures so far the government needs to be clear, now, how this will be managed going forward, and over what period of time.

“The ongoing risk to the taxpayer will run for 20 years on things like arts and culture recovery loans, let alone the other new risks that departments across government must quickly learn to manage.”

Rishi Sunak and Boris Johnson

UK Covid cost: How much will the pandemic cost? How much will taxes go up? (Image: GETTY)

How much debt is the UK in?

The UK Government is now in debt to the tune of £2.2 trillion.

This is about 99.7 percent of GDP, a rate not seen in the UK since the 1960s.

In June alone, the interest from the debt cost the UK £8.7 billion.

Rishi Sunak

UK Covid cost: How much will the pandemic cost? How much will taxes go up? (Image: GETTY)

In the first year of the pandemic, from April 2020 to 2021, it borrowed £299bn, the highest figure since records began in 1946.

The Government is expected to borrow less in the current year, April 2021 to 2022, though the figure could still be more than £200bn.

On top of the money borrowed to pay for schemes like furlough, the pandemic has also reduced the amount of money the Government has acquired through taxes.

So with more money going out, and less coming in, it means the Government needs to borrow – and this is likely to continue for years to come.

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How will the Government pay for the pandemic?

The Government is concocting a number of changes to pay for the coronavirus pandemic.

In March, Rishi Sunak announced measures which will increase most people’s tax bills next year.

The amount you can earn without paying tax – known as the personal allowance – will stay the same from 2022 to 2026, instead of the usual small increases that take place each tax year.

Boris Johnson

UK Covid cost: How much will the pandemic cost? How much will taxes go up? (Image: GETTY)

The amount people can earn before paying a 40 percent tax rate instead of 20 percent will also be frozen.

Businesses will also pay more tax, as the rate of tax on their profits – corporation tax – will rise from 19 percent to 25 percent in 2023.

There is also likely to be a rise in National Insurance contributions, with a new rate of a penny for every pound brought in.

There is rumoured talk of the scrap to the triple lock on state pensions, as the pandemic may inflate the money given to pensioners artificially instead of

Harry Byrne

Harry Byrne

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