HMRC stats shows tax take for August remains high

Tom Goddard, Private Client Tax Advisor says:

The statistics released today show that HMRC collected £60.5bn in August 2024 and the total takings for the last 12 months are up 3.36% on the previous 12-month period, showing a rate of increase greater than the current rate of inflation.

However, borrowing is increasing partly due to the increase in public service salaries. Income tax receipts are up by 8.75% on the last 12 months with the total income tax takings being the highest for the month of August on record. However, self-assessment income tax receipts are actually down 0.57% on this year. Given PAYE receipts are up 9.56% on the previous year we can see an increase in income tax receipts that have no doubt been contributed to as a result of Labour’s above inflation rate public sector pay rises.

HMRC’s statistics show that unincorporated businesses are struggling as there has been a decrease in Self-Assessment tax receipts (required for by self-employed people and partnerships). This may be due to recent high inflation and increased public service salaries encouraging workers to ask for higher wages as the aftermath of the cost-of-living crisis are still felt.

Corporation tax is up 11.82% on the year showing companies remain profitable. The increase of corporation tax rates to 25% and the use of ‘windfall tax’ for energy companies profiting from a volatile energy market contribute to this increase, alongside the burden of the increased tax rates being passed to the consume.

UK Inheritance tax (IHT) continues to be on the rise because of fiscal drag and more and more people are having to consider their IHT position who would not typically need to. IHT taking were the highest August on record following the highest July on record last month.

Capital gains tax (CGT) rates have decreased 13.73% from the previous 12 months, likely due to a slow property market and the tightening of the publics purses due to an expensive summer with high interest rates/ inflation and an increasing tax burden.

The monthly CGT figures mainly relate to property transactions with CGT on other assets due for payment by 31 January following the tax year. We expect that the January CGT tax take therefore will be much higher than usual given public apprehensions on the potential for CGT rates to increase. Therefore, more people are looking to sell their non property assets in preparation of this. One to look out for next year.

Stamp Duty Land Tax takings also continue their decline as a result of the increased bands. Increased mortgage rates coupled with an expensive summer with high costs of living are likely dissuading those from selling their property. Commercial property investors have also been reluctant to invest in UK commercial space due to a new incoming Labour government and the uncertainty attached to this.

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