HMRC raked in £70.8bn in total tax collected in April 2023 from £63.4bn the previous month, with inheritance tax (IHT) continuing to rise as a result of frozen allowances and inflation
For the month, the tax authority collected £70.9bn, which was £7.3bn higher than in March 2023, and around £1.8bn higher than in the same period a year earlier.
The latest figures on tax receipts for April 2022 to April 2023 totalled £786.6bn, which was £71bn higher than the same period last year.
Tax receipts from income tax, capital gains tax (CGT) and national insurance contributions (NICs) totalled £40.5bn in April 2023.
Income tax totalled £24.2bn, up from £20.2bn in March 2023. When compared with the previous year, the tax accounted for £22.8bn.
Paul Falvey, tax partner at BDO said: ‘Figures show the amount of income tax collected in April was up by 6% year-on-year, with a notable 9% jump in PAYE income tax receipts reflecting current high employment levels, and the impact of April’s wage rises pulling more people into tax or into higher rate brackets.
‘The new data also shows the stark challenge facing the Chancellor. While overall year-on-year tax revenues rose by £1.8bn in April, public sector net borrowing in the same period jumped by £11.9bn, the second highest April borrowing figure since records began. This will make it harder for the government to cut taxes.’
House prices and frozen allowances pushed inheritance tax (IHT) receipts to £597m from £679m in March. This was up from £507m in April 2022.
In the last 12 months, estates have paid £7.6bn, an increase of £1bn, equivalent to an 18% hike, compared to the same period a year earlier.
Commenting on the figures, Daniel Tomassen, senior manager at HW Fisher, said: ‘With HMRC bringing in a record amount of income from inheritance tax, now is the time to make sure you are clued up on the rules around gifting.
‘Keeping a clear record of gifts made can make life easier for the individuals dealing with the estate and calculating the IHT payable. The deadline for HMRC enquiries for IHT is significant and therefore good records can ensure the executors pay the correct amount and minimise the chances of late payment interest and penalties being levied by HMRC.’
The IHT tax nil rate band, which is the maximum amount a person can inherit before paying the tax, has been frozen at £325,000 since 2009 and is set to remain until at least April 2028.
In the 2021/22 tax year, only 3.76% of UK deaths resulted in an IHT change, totalling £6.1bn in IHT receipts.
Laura Hayward, tax partner at Evelyn Partners, said: ‘The latest year-on-year increase in IHT receipts provides more good news for the Treasury. Given the inflationary growth of asset values coupled with frozen allowances, the rise and rise of IHT receipts seems to be unstoppable.
‘The update from HMRC should be a wake-up call for families to give careful thought to their tax planning to ensure they don’t pay more tax than they need to. Families can minimise the chances of being hit by a hefty IHT bill by taking action now.’
Overall receipts for business taxes for April were £4.1bn, which is £300m higher than in the same period a year earlier.
VAT receipts for the 2022/23 tax year hit £159.5bn, an increase from £157.4bn in the previous year. For the month, VAT receipts hit £17.8bn, up by £500m.
The growth compared to the previous year could be attributed to both high levels of inflation and changes in real consumer expenditure.
Stamp duty land tax (SDLT) receipts hit £1.2bn in April, which was £700m lower than in the same period a year earlier, which stood at £1.4bn.
Air passenger duty (APD) totalled £3.2bn for April to April 2023, which is £2.2bn higher than in the same period a year earlier – explained by the lifting of covid travel restrictions.