£134bn: Biggest rise in tax receipts since 2000 gives chancellor room to make cuts
The new chancellor of the exchequer may have leeway for tax cuts, after a £134bn spike in so-called ‘stealth ‘ taxes.
There was the biggest increase in receipts since the turn of the century over the last 12 months, up to £718bn, representing a 23 per cent increase on the previous year.
The rise from £584bn IN 2020/21 comes from the government’s freeze on income tax thresholds and increases in national insurance contributions, according to accountancy group UHY Hacker Young.
Last week, former chancellor Rishi Sunak quit his post along with ex health secretary Sajid Javid, as they sparked a Tory coup against Boris Johnson.
Former education chief Nadhim Zahawi is the new chancellor, though he has put his hat in the ring to be Tory leader also.
Reflecting on what the increased tax burden may mean for the chancellor, Sean Glancy, Partner at UHY Hacker Young said: “stealth tax rises have swelled the coffers of HMRC.”
“Keeping income tax thresholds frozen has dragged millions more people into higher tax bands, while the increase in national insurance has also boosted revenues.”
There were also reports that Sunak and Johnson fell out over when and by how much to cut corporation tax, while some Tory leadership hopefuls such as Jeremy Hunt, have advocated the move to help businesses.
The corporate tax director at UHY Hacker Young, Nikhil Oza, said firms would argue that “corporation tax at 19 per cent would help maintain and encourage inward investment during a period on high volatility following Brexit, Covid and Russia’s invasion of Ukraine.”
“Given the bumper year for revenues we have just seen, the next Government may wish to use some of that leeway to keep the UK an attractive place to invest and give businesses – especially SMEs – more scope to invest in boosting UK productivity.”