Tax receipts total £553 billion as threshold freeze bites

Total tax receipts have hit £553.2bn so far this year, up £48bn on the same period a year earlier, with a £1.7bn boost from the windfall tax on energy producers

In December, the tax take hit £62.4bn, up from £55.5bn in November, with more than half the revenue coming from employment taxes. So far this year, tax receipts are up by 9.5% from £505bn for the period April to December 2022, reflecting across the board tax rises.

The main contributors were income tax, capital gains tax and National Insurance contributions (NICs) (£34bn), business taxes (£9.4bn) and stamp taxes (£1.8bn).

The rising tax burden on workers has resulted in a sharp increase in revenue generated from income tax, including PAYE, up from £31.4bn to £35.4bn since last December. The pressure from higher taxes will only get worse as personal tax free thresholds remain frozen until 2028.

Receipts from PAYE income tax and NICs were £281.1bn, which was £34.3bn higher than in the same period a year earlier. The increase in NICs rates due to the health and social care levy, in force from May until November 2022, affected receipts for a seven-month period.

Myron Jobson, senior personal finance analyst, interactive investor, said: ‘The latest bumper tax haul shows that the deep freeze to income tax thresholds has already started to bite.

'It is a sneaky way for the government to replenish the public kitty following big spending on Covid and cost of living support measures. But the heightened tax burden comes at a time when many can least afford it.’

Compliance activity has also ramped up now that HMRC staff are able to focus on identifying tax evaders. So far this year HMRC has issued £529m in penalties to taxpayers, compared with £416m last year. This is nearly as much as last year’s total penalty figure of £581m.

In line with previous months, inheritance tax rose in line with the continual rise in house prices, as more estates are pulled into the tax. Inheritance tax receipts were down on November at £545m, but this was substantially up on last year’s £474m.

The total inheritance tax take so far this year was £5.3bn, up £700m (16%) on 2021-22. However, HMRC warned that the higher receipts in June and November 2022 could be attributed to a small number of higher value payments than usual.

Business taxes increased by 19% to £9.4bn, partly due to the introduction of the energy profits levy which raised £1.7bn.

The recovery in the travel sector has seen a substantial £1.8bn rise in revenue from air passenger duty. Compared with last year, December saw £249m in flight taxes, against £149m a year earlier.

Stamp duty land tax (SDLT) raised £1.4bn bringing the annual total to £15.7bn, which was up a staggering £1.8bn; this figure excludes devolved property taxes from Scotland and Wales.

Revenue from VAT was comparable with the previous year at £116.7bn, up only a fraction at £21m. Comparisons with the previous year are complicated as revenue from VAT deferral repayments no longer has an impact. HMRC warned that ‘receipts in 2022 will be influenced by high inflation and subsequent changes in real consumer expenditure.

Looking for advice? Check out our full range of services. From payroll help to taxation advice, our expert team is available to lend a hand.