U.K. Tax Office Accused by Former Head of Meddling in Politics

(Bloomberg) -- A former chief of the U.K. tax authority has accused the department of meddling in politics by urging all employers to explain that a controversial 12 billion pound ($16 billion) payroll tax rise next month will fund Britain's health service.

Edward Troup, who as permanent secretary was the top civil servant at HM Revenue & Customs in 2016 and 2017, questioned whether the advice “falls within HMRC's legal powers for ‘care and management' of the tax system.”

Writing on Twitter, he said HMRC was “asking employers to push the political narrative for a tax rise.” As an institutional arm of government, HMRC is supposed to be politically neutral.

The request came in a letter from HMRC to employers to prepare them for the tax increase next month. It read: “We would appreciate your assistance to help your employees understand that the increased National insurance contribution of 1.25 percentage points in April is helping fund the NHS, health and social care.”

Employers should include a message “on all payslips” between April 6 this year and April 5 next year that reads: “1.25% uplift in NICS funds NHS, health and social care.”

In 2023, the tax rise will formally be rebranded the “health and social care levy” but this year it will just show up as a higher rate of payroll tax. The increase has become a political minefield, with business groups and many members of the ruling Conservative Party calling for it to be scrapped to ease the cost of living crisis hurting many households.

Chancellor of the Exchequer Rishi Sunak, who insisted on the levy to pay for the cost of clearing health backlogs and to cover social-care reforms, has insisted that the tax rise will go ahead.

An HMRC spokesman said: “We want people top be aware of why this increase is happening. It is an objective fact [that the tax rise is to pay for health costs]. I don't think it's political.”