HM Revenue & Custom’s ("HMRC") monthly statistics show that tax receipts are up by £31.7bn (almost 6%) when compared to the 12 months to February 2016. Receipts for January and February 2017 alone account for more than a third of this increase.
The February tax stats released yesterday, Tuesday 21 March, show that the continued growth is supported by self-assessment receipts which are up by a substantial 17%. The January and February combined receipts account for £18bn. The growht is also fuelled by 10.7% (£4.8bn) incraese in Corporate Tax receipts and 8.6% (£9.8bn) rise in National Insurance contriubutions receipts.
Paul Haywood-Schiefer, assistant manager at Blick Rothenberg, explained the figures: “The Treasury has seen a significant increase in the self-assessment receipts over the last 12 months. Taxpayers under self-assessment regime are generally paying their tax in January with a prepayment in July so it is those two months –plus August and February for the late payers– which are the most significant to look at. Self-assessment taxpayers, generally business owners, often have a lot more control over their earnings, with more flexibility over their salary and also the dividends they pay out.”
“As a result of the changes to the taxation of dividends announced in 2015, a large number of these business owners who could exercise this control on their income, rushed to declare dividend payments before the 6 April 2016 deadline. The tax paid on these dividends fuelled HMRC’s tax take, which shows that such changes in policy do have an impact.”
Paul said: “The same happened before the additional rate of tax was introduced in April 2010. People raced to pay dividends before the introduction of the new rate and the self-assessment receipts for the months of January and February 2011 –when tax would be paid over on dividends made in the 2009/10 tax year– were £14bn.
“However, one year later the receipts for January and February 2012 had fallen to £12.8bn. It wouldn’t be a surprise to see a lower tax take from self-assessment receipts in January and February next year.”
He added: “The recent reduction of the dividend allowance to £2,000 announced in the last Spring Budget and due to take effect from April 2018 is unlikely to have much impact on whether business owners bring forward more dividends.
“In reality it is only going to cost a maximum of £1,143 for additional rate taxpayers, £975 for higher rate taxpayers and £225 for basic rate taxpayers, and so the margins are too small for business owners to get excited about savings on such small amounts”.
For more information please contact Paul Haywood-Schiefer at email@example.com