Brexit & EconomyHMRCBumper year for HMRC as taxes on wealthy bite

Bumper year for HMRC as taxes on wealthy bite

Tax receipts in biggest leap since recession, accountancy network says

HMRC has enjoyed a bumper year with tax receipts rising by 6.75% in the last year – the fastest level since the recession, according to analysis by UHY Hacker Young.

Tax take rose by £35.6bn in 2016/17 to £569.3bn, driven largely by taxes that target wealthy individuals, leading the national accountancy group to warn that the tax burden could disincentivise entrepreneurs.

A study of the figures published by HMRC show that taxes targeting the wealthy led to big gains for the taxman, including:

  • Capital Gains Tax – up 19% in a year from £7.1bn to £8.4bn
  • National Insurance Contributions – up 10% from £113.7bn to £124.9bn
  • Stamp Duty Land Tax – up 10% from £10.7bn to £11.8bn, driven by an increase in SDLT on homes worth more than £1 million
  • Inheritance Tax – up 3.8% from £4.65bn to £4.82bn

“The last year has been a bumper one for the taxman, primarily thanks to bringing in more money from wealthier individuals and entrepreneurs,” commented Andrew Snowdon, Partner at UHY Hacker Young.

“Income tax receipts rose strongly, but that was driven more by increased tax take from entrepreneurs and the self-employed than from employees. The many tweaks made to National Insurance Contributions (NICs) over recent years have resulted in a big jump in income as more people pay higher rates of NICs.

“What’s more, entrepreneurs and other self-employed people that previously opted out of the state pension have been forced to pay NICs under changes introduced last year. Changes made to CGT over recent years have also driven up returns from this tax.”

This has led Snowdon to warn that these changes may have a negative impact: “Too high a tax burden on entrepreneurs risks disincentivising them.”

Last month Collyer Bristow warned that HMRC’s focus on entrepreneur’s relief could prompt an increase in avoidance scheme usage.

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