Inflation-fuelled bumper tax haul leaves some Britons with a sour taste

interactive investor comments on HMRC tax receipts at a time of rocketing energy bills.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The bumper tax haul demonstrates that inflation – both wages and house prices – is feeding through into the revenues’ coffers and this may leave a sour taste at a time [when] people can’t afford energy bills.

“The freezing of the income tax personal allowance and higher-rate threshold until 2026 in tandem with growth in wages has dragged many consumers into a higher tax threshold. The jump in National Insurance tax receipts is attributable to the 1.25% percentage points increase to the NI rate back in April – although the NI threshold increase in July eased the tax burden for some.

• Read about: Free regular investing | Opening a Stocks & Shares ISA | Cashback Offers

“Stamp Duty continues to be a lucrative source of income for the taxman. The impact of runaway house prices has been immense, with the ongoing supply/demand mismatch pushing up the value of the average UK home to £286,000, according to official figures.

“The increase in the government’s inheritance tax takings and the freezing of the nil rate and residence nil rate bands until at least April 2026 means that more and more people are falling into scope beyond the very wealthy.”

Key points:

• Total HM Revenue and Customs (HMRC) receipts for April 2022 to July 2022 are £252.6 billion, which is £26.7 billion higher than in the same period a year earlier.
• Cash receipts were higher from Income Tax, Capital Gains Tax & National Insurance Contributions (NICs) (£17.5 billion), business taxes (£4.2 billion), Value Added Tax (VAT) (£2.2 billion), and stamp taxes (£1.3 billion)
• in percentage terms, receipts were higher from business taxes (24%), stamp taxes (23%), Inheritance Tax (14%), Income Tax, Capital Gains Tax & NICs (14%) and VAT (4%)