21 September 2022
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:
"New data from HMRC shows that as house prices march ever higher so does the tax take from inheritance tax (IHT). IHT is proving to be very lucrative for the Treasury these days with IHT receipts for April to August 2022 up to £2.9 bn, which is £0.3 bn higher than in the same period a year earlier. In years gone by, although universally hated, IHT was something only the very wealthy suffered.
"However, now partly because of soaring property prices more and more people are getting caught in the IHT net. The fact the Nil Rate Band and the Residence Nil Rate Band will remain frozen until 2026 does not help either. Many families particularly in the south east that might not class themselves as wealthy will have to pay IHT just because their properties have increased so much in value.
"Elsewhere, the latest HMRC data shows receipts from Income Tax and National Insurance payments for April to August 2022 were £161.1 bn, which is £22.1 bn higher than in the same period a year earlier.
"This increase is surprising considering from that from the 6th July the national insurance threshold, which is the level of earnings at which you have to start making contributions, became the same as the income tax threshold (known as the personal allowance).
"What this change meant is that around 30 million people now pay less national insurance and enjoy an average of £330 more in their pay packet during the year. However, national insurance will be in the spotlight on Friday when new Chancellor Kwarteng delivers his first “mini-budget”. It is widely expected that he will announce that they will be scrapping the National Insurance hike altogether.
"While Rishi Sunak had already partly reneged on the NI hike by increasing the NI threshold, a further Tory U-turn to remove the 1.25 percentage point increase would help to ease people’s financial worries even further. However, the impact will be paltry compared to any proposed cap on energy costs.
"The wider costs of scrapping the hike is yet to be seen and these figures may tell a very different story in months to come. This will beg the question of how the social care reforms touted for 2023 will be paid for."
