Today, government statistics show that HMRC tax receipts are £80 billion higher than before the pandemic, said leading tax and advisory firm Blick Rothenberg.
Looking further at the detail Paul Haywood-Schiefer, a senior manager at the firm, said: ‘Self-assessment income tax receipts collected in January and February 2022 (the two months when people were due to pay it overdue to extended deadlines) saw a small reduction of just over £800 million from the same two months in 2021.’
‘While the self-assessment receipts have dipped, capital gains tax receipts are positively buoyant. Rules on paying tax on property transactions throughout the year mean that there is now a steady inflow each month. Total receipts are up nearly £5 billion (£4.8 bn) in the last 12 months.’
Paul added: ‘There was much speculation following the Office of Tax Simplification’s suggestion to align CGT (capital gains tax) rates to income tax rates, which led to additional trades with investors acting to bank gains before a tax rise that never came. It shows the power of speculation, as the Government has created revenues here from investors’ fears.’
‘All taxes are accelerating year on year at a high rate – way above inflation. VAT leads the way (though those results need to be tempered by the VAT holiday, which means the increase in the last 12 months is not reflecting like for like a collection), with SDLT close behind. It is hard to pick out what is driving this, as inflation is at 5% in the period. SDLT receipts reflect the much-increased property transactions, which are 30% higher yearly. However, the property activity from October to February is lower than last year, which could signify an imminent drop.’
Paul concluded: ‘Importantly, income tax and PAYE is up 13%–15% given this accounts for most of the tax take for the Government, the finances should be in a better shape. CTX (Corporation tax) may be driven by the incoming CTX increases from April 2023.’
‘Income tax / PAYE / NIC receipts may increase significantly for March 2022 before introducing the Health and Social Care levy. Interestingly NIC receipts remain almost constant between 2019–2020 and 2020–2021.VAT receipts for 2021–2022 are up significantly against 2019–2020, i.e., before the pandemic – possibly due to increased spending post-pandemic. Going forward though, rising costs may have an impact here.’