Record 2024 tax receipts for HMRC due to a high tax burden on businesses and taxpayers

Robert Salter, Director said:

The 12 months up to December 2024 brought in record receipts for the Government with total receipts being 3.29%, or approximately £27bn up on the figures for the previous year. Meaning that the Government’s total receipts in this period were almost £850bn, but the high tax burden on British businesses and private taxpayers could become counter-productive over the coming months.

The increase in employer NICs to 15% from 13.8% coming in April may well reduce UK employment rates overtime, either through the offshoring of work overseas or the replacement of employees with technology. Income tax and NICs are two of the largest tax generators for the Treasury, accounting for over 50% of UK tax revenues each year, and even a relatively small percentage drop in these revenue streams could make a large impact on total Government receipts.

According to HMRC’s statistics, while National Insurance Contributions (NICs) have fallen during this period by almost 3%, a result of the NIC cuts from previous Chancellor Jeremy Hunt, which were not cancelled by Rachel Reeves, the great majority of other taxes increased significantly over the year.

In particular, income tax has increased by 8% in total, a development which has been driven partly by higher wages but also because of the fiscal drag caused by both Conservative & Labour governments who froze the personal tax allowance and the various income tax bands over a number of years.

Fiscal drag forces more people into paying income tax or higher rates of income tax. This process will likely continue as income tax bands and the personal tax allowance are scheduled to remain fixed for another 3 years.

Corporation tax has also increased significantly over the last 12-month period, with these showing an increase of 8.73%, but this is mainly driven by the increase in the corporate tax rate from 19% to 25% rather than any substantive increases in profits amongst British-based corporate businesses.

Robert concluded

The treasury will no doubt be hoping and expecting further record receipts for the 12 months to January 2025, as self-assessment tax receipts typically boost the Government’s revenues for that month.

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