The overall tax take by HMRC over the past year has now stabilised at £607bn, stopping the freefall during the early months of the pandemic, say leading tax and advisory firm Blick Rothenberg shows.
Robert Pullen, a tax partner at the firm, said: “Public finances took a battering when the first lockdown was imposed – with the tax take plummeting between February and April 2020 by over £28bn. This continued throughout the early part of the summer until September 2020 with a further drop of just over £43bn.
“Since then however, business and individuals appear to have adapted so that even during the subsequent lockdowns and tiered restrictions, the tax HMRC has collected has held ground, with only a £500m difference between the year to April 2020 (£607.8bn) and the year to April 2021 (£607.3bn) – albeit still lower than the year to April 2019 (£623.3bn).”
Robert added: “There was strong growth year on year in the months February to April 2021, increasing by over £39bn compared to the year before and more than reversing the reduction at the time. As such, and if the upward trend continues into May 2021 it is possible the immediate financial implications on the tax-take caused by the pandemic will be reduced over the next few months.”
Robert said: “Of note is the resilience in the PAYE and NIC receipts which have actually increased over the last year despite the disruption. VAT is also holding up strongly with receipts in March 2021 similar to that seen in March 2019.”
He added: “There has been a recent uptick in SDLT and property transactions, most likely reflecting the time-limited SDLT incentives. Customs Duties also appears to have rebounded in March, being higher than in either of the prior two years for that month.
Robert said: “Two of the fastest growing taxes over the last year has been Inheritance tax and Capital Gains Tax. Both taxes have been rumoured to be in the Chancellor’s sights and the increased tax collection could be a reflection of individuals accelerating gifts or realising asset values by making disposals.
“At a combined £16.5bn, the tax take from these taxes is relatively small compared to income tax (£200bn) and corporation tax (£50bn) and so unlikely to make a big difference in the country’s finances if Rishi does make changes to the tax regime.”