Income tax take soars £28bn over one-year period

Income tax take soars £28bn over one-year period

Nov 24, 2023

From November 2022 to October 2023 the total amount of income tax paid was £262bn, a £28bn rise compared to the previous year’s £234bn

In the last six months the total amount of income tax paid was £145bn, a jump of £14bn on the same period of 2022.

Income tax take hit £18bn in October, a £2bn increase on the previous year as frozen thresholds took their toll on taxpayers and more people were dragged into the 40% tax bracket.

Total HMRC receipts were £66bn, up from £64bn the previous October and £9bn up from October 2021.

HMRC collected £457.3bn from April to October 2023, a £23.9bn increase on the same period of 2022.

From April to October 2023 the biggest rise in receipts came from income tax, capital gains tax and National Insurance contributions, which raked in a total of £11.2bn. Total VAT was £101.4bn, up by £8.2bn, stoked by inflation.

Business taxes were up 17% at £50.2bn, which was £7.1bn higher than the same period last year, reflecting the 6% hike in the corporation tax rate to 25%.

The energy profits levy raised £967m in October while the businesses have paid £12m since the new economic crime levy came into effect in September.

The impact of higher interest rates has hit activity in the property market, reducing the amount of stamp duty land tax raised. This figure dropped slightly over the last two Octobers, currently sitting at £11.19bn for October 2023 while the figure for October 2021 was 13.23bn. This drop reflects the significant rise in mortgage rates over the year.

Rosie Hooper, chartered financial planner at Quilter said: ‘PAYE income tax and National Insurance receipts from April to October 2023 reached £232.5bn while inheritance tax receipts hit £4.6bn. This huge growth illustrates why the Chancellor is weighing up tax cuts for tomorrow’s Autumn Statement to boost popularity with the electorate ahead of an election year.

‘Though a cut to the headline rate of inheritance tax has been widely rumoured, it seems more likely now that this plan will be shelved in favour of a cut to income tax or NI – a change that would be more welcome given it could make a difference to lower income families, even if only marginal.

‘A 1p cut to income tax or national insurance could allow basic rate taxpayers to save a maximum of £377 annually, increasing the disposable income of those households who need it most.’

Inheritance tax (IHT) take in October was £6.91bn, up from last year’s £5.8bn. In 2021 inheritance tax for October was £4.6bn. From November 2022 to October of this year the total amount of inheritance tax paid was £7.5bn, a £1bn increase from £6.5bn from November 2021 October 2022.

Laura Hayward, tax partner at Evelyn Partners said: ‘The Treasury will welcome the news that IHT receipts have shown yet another year-on-year increase. All eyes are now on whether IHT will get a mention in the Chancellor’s Autumn Statement. While abolishing IHT completely would be a popular move with many, it seems more likely that the government will reserve this as an idea for a Conservative election manifesto pledge.

‘There has been some speculation that there could be a cut to the rate charged, which is currently levied at 40% on estates above the value of £325,000. Some have also suggested that the main nil-rate band (£325,000) could be combined with the residential nil-rate band allowance (currently £175,000) to give a total IHT-free allowance of £500,000.’