The biggest part of this is VAT at £45 billion, most of which will be a timing difference as payments deferred early in lockdown will gradually be made over the next few months.
More fundamentally, Corporate Tax receipts are down by £7.8 billion or over 13.5%, with total receipts for the year below £50 billion. This highlights the extent of the business slowdown as many companies have struggled to survive during the long lockdown periods.
March is normally a bumper month for Corporate Tax receipts, with the largest companies paying their first quarterly instalment for the year. In March 2020 – before the full impact of the pandemic was apparent – receipts were £6.5 billion. We would expect March 2021 to be at least £2 billion lower than this, and perhaps more.
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