21 November 2024
If you are covering the latest HMRC tax receipts and national insurance contributions data, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
"The latest HMRC figures, released this morning, reveal that inheritance tax (IHT) receipts for the period April to October 2024 have reached £5.0 billion an increase of £0.5 billion compared to the same period last year. This consistent upward trend underscores the government’s rationale for freezing the IHT threshold until 2030. However, incorporating pensions into the taxable estate from April 2027 will turbo charge this data.
"Farmers are also likely to start to bolster these figures as Agricultural Property Relief (APR) is made less generous. These changes mean more farmers may face higher IHT liabilities, potentially forcing difficult decisions about the future of family-owned farms. Similarly, the tightening of reliefs for AIM shares and Business Relief (BR) will also raise more for government coffers. These various changes are likely to drive greater urgency in estate planning, as taxpayers seek to navigate a landscape where traditional reliefs and exemptions are gradually eroded and new financial plans need to be laid.
"Capital Gains Tax (CGT) receipts saw an uptick in the months leading up to the budget reflecting the impact of pre-budget rumour mill and expected policy changes. In fact, receipts were around £180 million more in the period from April to October 2024 compared the same period a year earlier. Some investors and property owners will have moved to offload assets ahead of the widely anticipated CGT increases announced in the recent budget.
"In addition, PAYE income tax and National Insurance contributions (NICs) for the same period have risen to £244.4 billion reflecting a £5.8 billion increase year-on-year. While the personal tax take from NICs is not expected to rise significantly, the government has made significant changes to employer NICs. The recent budget introduced an increase in the employer NICs rate for employees and a reduction in the earnings threshold at which employers begin to pay NICs. These measures, designed to target businesses rather than individuals, are set to deliver a significant boost to government revenues. Although businesses may be forced to slow wage growth in the face of increased costs.
"These figures underscore the government’s reliance on fiscal drag and incremental policy changes to boost revenues without formally increasing headline tax rates. While Labour has maintained its pledge not to raise taxes on working individuals, the combination of wage inflation and frozen thresholds means that taxpayers are increasingly being caught in higher tax brackets.
"As the government navigates these complex fiscal dynamics, it will be crucial to monitor the long-term impact on taxpayers and the economy. Policies aimed at raising revenue must strike a delicate balance to avoid disproportionately burdening certain groups or stifling economic growth. With tax receipts continuing to climb, the need for clear, transparent communication and strategic financial planning becomes ever more critical."
