Britons set for 'devastating hit' if Sunak policy fails says CBI boss
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With UK households facing a soaring cost-of-living crisis this year, many have questioned the planned hike, saying it puts extra strain on workers and businesses. With one day to go until Rishi Sunak’s Spring Statement, HMRC shows its takings from tax receipts rose by £132.1 billion between April 2021 and February 2022. Within this increase income tax, capital gains tax and National Insurance all contributed an extra £43.2 billion to Government coffers.
The rise in tax takings has left the deficit for 2021-22 lower than expected, coming in at £26 billion smaller than forecast by the Office for Budget Responsibility (OBR).
The news has provided ammunition for those seeking a delay or cancellation of next month’s National Insurance hike.
Writing on Twitter, backbench Conservative MP John Redwood asked: “How come the Treasury insists they need an extra £12 bn National Insurance to square the books?
“They underestimated how much tax we are already paying by a large amount.”
According to HMRC, both the number of paid employees and median monthly pay have increased, accounting for the rise in takings.
Meanwhile VAT takings increased by £61.3 billion, which HMRC puts down to the VAT payment deferral scheme which allowed firms to delay payments due during the pandemic between March and June 2020.
VAT takings have also increased on petrol due to rising oil prices which have seen the average cost of a litre of unleaded reach 167p at the pumps.
Greater demand for fuel was also shown in HMRC’s data with receipts from fuel duty up by £4.5 billion.
Currently over half the cost of a typical litre of petrol goes to HMRC, made up of 57.95p of fuel duty and 27.84p of VAT.
Chief Executive of the Resolution Foundation Torsten Bell described the recovery in tax receipts as “the big story”, arguing that higher borrowing than expected in February should not overshadow lower overall borrowing.
The think tank has called for the Chancellor to raise working and pension age benefits to better match inflation as a way of providing more targeted support on the cost of living.
Julian Jessop, Economics Fellow at another think tank The Institute of Economic Affairs, commented: “Inflation will surely reduce the burden of debt relative to national income, especially with real interest rates likely to remain low – even negative – for the foreseeable future.
“Indeed, debt has already fallen to 94.7 per cent of GDP, from a recent peak of more than 100 per cent.
“In short, there is nothing in these numbers to prevent the Chancellor from easing the pressure on households and businesses in tomorrow’s Spring Statement.”
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Mr Sunak way well find political pressure around taking action though.
Former OBR Committee member Charlie Bean told Express.co.uk the Chancellor would be “reluctant” to carry out any temporary cuts to National Insurance or fuel duty due to concerns there may be pressure to maintain them.
HMRC’s rising tax takings have also sparked fears over inheritance tax which saw receipts rise by £0.7 billion, costing the average estate £209,502.
Shaun Moore, Tax and Financial Planning Expert at Quilter, warned: “IHT was once viewed as a tax on wealthier individuals, but due to runaway house prices more people are getting caught by the tax and many people who would not consider themselves wealthy will now face a hefty IHT bill.
“This is well reflected in the fact that London and the Southeast have the most amount of estates paying IHT, which is due to the above average house prices in the region.”
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