The latest HMRC’s monthly tax statistics suggest that more people has joined the self assessment regime, which is an indicator that small businesses are beginning to grow, say London Chartered Accountants Blick Rothenberg LLP.
The figures to 31st July released on Friday show that self assessment income tax receipts in July 2015 have increased by £1.15 billion compared to the July 2014 receipts.
Paul Haywood-Schiefer, Personal Tax Assistant Manager at Blick Rothenberg LLP, said: “With the freeze in tax rates, a £1.15 billion increase in self assessment income tax receipts is indicative of more people joining this regime, increasing profits leading to the higher tax receipts and the notion that small businesses are beginning to grow.”
Paul explained that for most people in the UK, their tax will be collected via PAYE on their employment income and they will have no further requirements, therefore they will not need to complete a Tax Return. However, for those people who are self employed, have rental properties or are higher rate taxpayers with investment income, they will have to complete Tax Returns through the self assessment system to calculate their tax liabilities.
He added: “The July results are significant because, under self assessment, the tax is collected through the payments on account regime, whereby an individual will make two payments towards their tax liability for the year based upon the previous tax year’s liabilities. These “payments on account” are due by 31st January during the year of assessment and one on 31st July after the end of the tax year. Therefore, the additional tax receipts in July would point to increasing profits of the last year for those small business owners paying tax this way”
Commenting on PAYE receipts, he said: “PAYE receipts continue to grow with a £6.8 billion increase in the last 12 months being three times as much of the increase of the 12 months to July 2014. This coincides with the reduction in unemployment as new jobs are created and the economy grows.”
On the property front, last month saw the highest number of UK property transactions for 7 and a half years, with close to 120,000 properties changing ownership during the period. However, despite these figures, and that there were 8,800 more transactions in July 2015 than in July 2014, the corresponding Stamp Duty Land Tax (SDLT) receipts were £15 million down compared to the same period last year.
Paul said: “Due to the Government's first two Help-to-Buy initiatives, the relaxation in planning laws and increased employment, there is evidence of more housing completions within the lower valued properties under the “tipping point” of £937,500 (from when more tax is collected through SDLT than under the previous system). This offsets an apparent reduction in transactions on higher value properties where SDLT is proportionately more.”