Home Business News HMRC tax receipts surge by over 16% in the last year, the Chancellor could do more 

HMRC tax receipts surge by over 16% in the last year, the Chancellor could do more 

by LLB Finance Reporter
23rd Jun 22 2:29 pm

HMRCs total receipts in the last 12 months are up 16.32% (£733bn from £630bn) on the previous year buoyed by increases in receipts from VAT (£29.4bn), Income Tax (£26.1bn) Corporation Tax (£14.4bn) over the same period, say leading tax and advisory firm Blick Rothenberg.

Paul Haywood-Schiefer, a Senior Manager at the firm said: “As well as the increases in taxes across the board, CGT receipts also  continued to grow with £14.9bn taken in the last 12 months (up 30.9% for the previous 12 months total of £11.4bn).

Whilst most CGT is paid in January, February, and March each year, the figure has certainly been aided by the requirement to accelerate CGT payments on residential property transactions within 60 days of completion, which has collected just under £1.5bn compared to half that (£750m) in the same months the year before.

He added: “There is of course significant interest at the moment in NICs. The Health and Social Care levy of 1.25% was added to the base rates of NIC from April 2022 and this has led to an increase of £5.1bn collected in NIC in April and May 2022 (£30bn total) compared to the same months in 2021 (£24.9bn total). The increase in the NIC threshold alignment with the personal allowance for income tax purposes won’t happen until July 2022, and so workers have another month of pain before there is any relief.

Paul said: “Even with the alignment of the thresholds, a large proportion of people are going to still be worse off from where they were in the previous tax year, and that is before the current high rates of inflation are factored in. The Chancellor made the announcement of the increase in NIC (to collect the Health and Social Care levy) in September last year, with inflation sitting at just under 3%.

He added: “By the time we got to the Spring Statement it was close to double that and rising sharply. The Health and Social Care Levy could have been pushed back a year but this wasn’t done, and unfortunately many people are now facing the consequences of that decision.”

Partner Heather Self added: “Corporation tax receipts for the 12 months to May 2022 were at their highest ever level, at £66bn, compared to £52bn last year during the COVID pandemic. The highest previous year was 2019/20, when total onshore corporation tax receipts reached £60bn.

It’s not clear whether this relates to a general increase in company profits, or whether it’s very sector specific – such as the booming energy sector. If the energy sector does account for much of the rise this may lead to renewed calls for a windfall tax.

But with an extra £6bn in his pocket, the Chancellor could do more to support families who are struggling – on top of measures already announced”

VAT Partner Alan Pearce said: “VAT receipts are almost £30bn more this year than last year, but this was expected, mainly due to the payment of VAT that businesses were allowed to defer during the COVID period. Going forward VAT receipts are likely to fall back as these deferred payments drop out of the figures (the month of May is already less than May last year) and could even fall further if consumer spending slows more rapidly than the increases caused by the current rate of inflation.

Customs partner Simon Sutcliffe said: “An increase in custom duty receipts is due to two factors, The first is the end of the post-Brexit policy of the ‘Deferred Declaration System’. HMG allowed the delayed submission of customs entries and deferred duty payments in the immediate aftermath to secure supply chains of raw materials and basic food necessities without the incumbencies of additional customs paperwork. As this system ends amended entries are being submitted and   the corrected customs duties paid.”

He added: “Also, as prices rise of imported goods (fuel, raw materials, food stuffs etc.) the value for custom rises and hence there is ad valorem increase in collected duties.”

The changes in tax receipts over the last 12 months are varied and caused by different reasons. What is clear however is that tax receipts in general are out-performing inflation, which will increase the political pressure on the Chancellor to help struggling families more, or to bring forward the mooted personal tax cuts.

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