23 January 2024
If you are covering the latest HMRC tax receipts and National Insurance contributions statistics, please see the following comment from Shaun Moore, tax and financial planning expert at Quilter:
"As we edge closer to the Spring Budget, which may well be the last this government has in power, statistics like these today become ever more important.
"Once again, this government’s tax policy over the past few years is clear as day to see in the new HMRC figures as PAYE Income Tax and NIC1 receipts for April 2023 to December 2023 are £294.5 billion, which is £13.4 billion higher than the same period last year.
"However, the speed of increase should start to slow down from February as new data will feed through following the 2% cut to National Insurance from 12% to 10% for the main rate of Class 1 employee NICs announced at the recent Autumn Statement. The cut to NI will allow basic rate taxpayers to save a maximum of £754. That said, a drop is unlikely given that other thresholds remain frozen causing there to be a historically high tax burden alongside inflation driven wage growth.
"Rumours are swirling that a more significant cut to income tax or another NI cut is in the offing as the government tries to woo voters as we head into this election year. This change may cause tax revenues to drop more significantly if it does come to fruition.
"Inheritance tax was also an area that was rumoured to be abolished at the Autumn Statement but never materialised. However, given that inheritance tax receipts for April 2023 to December 2023 are £5.7 billion, which is £0.4 billion higher than the same period last year, it may prove hard for the government to opt to go so far given that it impacts a relatively small pool of people but brings a reasonable amount of tax revenue.
"Abolition of IHT would certainly split voters and it’s likely that Labour would fairly rapidly vow to bring it back into force if they were to get in. This could therefore become a serious area of contention over the following few months if the Conservative party is minded to push ahead with abolition. Regardless of which political party gets into government, simplification of IHT is certainly overdue."
