Latest published statistics indicate that the overall tax take HMRC received in the year to 31 August 2021 has now bounced back strongly, by over £105bn year on year, say leading tax and advisory firm Blick Rothenberg
Robert Pullen, a tax partner at the firm, said: “Overall, HMRC receipts were £669bn. This compares favourably to the prior year amount of £564bn, an increase of 18%. This jump in revenue has helped to claw back the significant hit taken due to the pandemic, when total HMRC receipts tumbled between year end Aug 19 and Aug 20 by over £66bn or 11%. The bounce back represents around 57% of the “lost” revenue HMRC would have expected last year.”
He added: “The increased tax revenue will be from a combination of the deferral reliefs for VAT and income tax ending, as well as greater economic activity since lockdowns have all but ended. These are promising signs for the Treasury and Rishi Sunak in particular, who will be under immense pressure in the run up to the Budget next month to increase tax receipts without angering the typical conservative voter base, as well as the new voters in ‘red wall’ constituencies.”
Robert said: “The tax statistics show significant increases in both PAYE (13%) and NIC (8%) receipts compared to August 2019. Whilst these increases on the one hand can be said to showcase the underlying strength of the UK economy and the labour shortages we are currently experiencing with a consequent increase in wages for many people, they would also appear to be an earlier indicator of the underlying inflation risks in the UK economy.
“There also appears to be a real risk that higher wages will simply result in more money ‘chasing’ the limited amount of goods and services which are presently available, which will realistically have an inevitable impact on high street prices in due course.”
Robert said: “Whilst these are positive movements in tax receipts, there remains a huge debt mountain to begin chipping away at. The overall tax take returning to a normal amount is only the first step in what will be a long recovery for the country’s finances, and which may need further (and unpopular) tax raising measures to succeed.”