Home Business News January saw a huge tax take for the Treasury from self-assessment taxpayers

January saw a huge tax take for the Treasury from self-assessment taxpayers

by LLB Finance Reporter
21st Feb 23 12:31 pm

January saw a huge tax take for the Treasury from self-assessment taxpayers, with the largest single tax receipts for a month from self-assessment ever, say leading tax and advisory firm Blick Rothenberg.

Joe Neal, Manager at Blick Rothenberg “This was a 33.3% increase from the January 2022’s tax take, equating to just under a £5.5bn increase. explains the huge increase.”

He added: “Although this looks a standout figure, and it is, as it is the largest ever tax take for one month in self-assessment, the figures aren’t effectively matching a like for like position when looking at the last two January’s tax takes.

“In 2021 and in 2022, HMRC extended the filing deadline due to Covid, which meant that some people hadn’t filed by the end of January and so made their payment later. That said, even taking the January and February figures in 2021 or the same months in 2022, the total is short of the huge tax take for January 2023. The total of nearly £22bn is 8.9% of the total income tax received by the treasury for the last 12 months.”

Joe said: “Covid had a huge impact on the economy with sole traders (who always pay tax via self-assessment) some of the worst hit.

“The figures probably suggest a combination of early dividends taken before the increase in tax rates from April 2022 (up 1.25%) and sole traders beginning to shed some of the Covid drops in trade, which in turn meant taxpayers were making lower payments on account (these are the prepayments of tax individuals under self-assessment make in advance of their tax due).

“Therefore, an increase in their income leads to higher tax and when their payments on account were lower, a shortfall in the amount of tax already collected and a larger balancing payment for January.”

He added: “This then also leads to higher payments on account for the following tax year (these are based on the prior year’s tax liability), the first of which is due in January, and this is reflected in these figures. Furthermore, it would also be fair to say, the self-assessment figures are the clearest indicator of fiscal drag in terms of the allowances and rate band freeze imposed by the Government.”

Joe said, “There were some other increases as Capital Gains Tax (CGT) receipts were up £2.5bn on the previous tax year.”

He added, “This increase was potentially fuelled by the worry that CGT rates were going to be aligned to IT rates, something many investors were concerned about before the Spring Statement in March.

“However, the controversy over the NIC rises with the Health and Social Care levy introduction, the focus was elsewhere meaning the Government did not follow the office of tax simplifications advice of alignment.

“As CGT is collected primarily in the January following the end of the tax year, these results are a reflection of the tax year ended 5 April 2022 and when we come to next January’s figures, given the economic turmoil, and hit to the markets globally, CGT receipts are expected to be much lower next time around.”

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