New figures released by HMRC show that the Coronavirus Job Retention Scheme (Furlough scheme) and Self-employed Income Support Scheme (SEISS) has cost the Government over £69.5bn, in the period from April 2020 to the end of January 2021, but ordinary tax payers should not be hit in the March Budget , say leading tax and advisory firm Blick Rothenberg
Paul Haywood-Schiefer, Tax Manager at the firm said: “The figures are quite staggering – if you add in the Eat Out to Help Out scheme, the cost of the three schemes is over 70 billion pounds (£70.4bn). To put that into context, that is almost equal to the combined total of Corporation Tax (£61.7bn) and Capital Gains Tax (£9.8bn) receipts for the previous tax year (year to 5 April 2020) added together (£71.5bn).”
Paul added: “Those numbers resonate, because Corporation tax is the fourth largest tax in terms of receipts behind only Income Tax, National Insurance (NIC) and VAT. It presents a significant problem to the Government about how they are going to start to claw this back. But we are not at the end of the pandemic just yet.
“The Chancellor committed to extend both schemes until April, but unless the virus situation is under control, the schemes should be extended or there will be a further hit to unemployment. This would increase government costs with job seekers allowance payments and decrease the tax that the Government receive from income tax and NIC.”
Paul said: “The Chancellor has a Budget in less than two weeks and there is a lot to think about before he gets there. The Government cannot continue to take these hits indefinitely. The tax take is going to be down for the year. The total tax receipts in the year to 31 January 2021 were £568.2bn; down by over 10% compared to the period 31 January 2020 when receipts were £636.5bn. With the additional problems arising around Brexit and businesses not being able to get their product into the market, these figures are likely to fall further.”
He added: “If the Chancellor decides to increase taxes next month, it is another hammer blow to the economy with businesses continuing struggle with the effects of the pandemic and Brexit.”
Paul said: “Now is not the time for tax increases, as it risks hitting the ordinary worker further. The Government needs to provide stability and support, and provide a forward lens on when any tax increases could happen so that people can prepare.”