HMRC is a public body but like all large companies, it publishes an annual report and accounts. For a document which covers around 300 pages, the 2018-19 edition published in July makes for interesting and informative reading. It provides an in-depth analysis of where the Treasury gets its money from. There are some surprising conclusions as well as evidence which supports speculation on what is happening in the wider economy.
HMRC collected £627.9bn in revenues in 2018-19, an increase of 3.6 per cent on the prior year. Of this, income tax and national insurance contributions (NICs) account for £329bn, a 4 per cent increase on the prior year, and corporation tax raised £53.5bn, an increase of just 0.4 per cent.
These increases reflect what we have seen more generally in the past year. Employment is at its highest rate since comparable records began in 1971, meaning that more people are now in work , whether employed or self-employed, and whether full time, part time or in the gig economy. We would therefore expect to see an increase in the amount of revenue generated by income tax and NICs.
Perhaps it is more of a surprise to see that corporation tax receipts have increased only marginally. However, we have been hearing for some time now that businesses have been concerned about the uncertainty caused by the Brexit process and that there has been a global slowdown. Whatever the causes, the negligible increase in corporation tax may suggest that, on the whole, UK companies have not significantly increased their profitability over the prior year.
The most surprising statistic is that capital gains tax has risen by a massive 19.2 per cent to £9.3bn. There has been no rate change in the period and HMRC’s accounts shed no light on the causes of the increase. However, it could very well be due to asset owners seeking to bank profits on assets currently standing at a gain, fearing that asset values will drop in the future.
Finally, you may be interested to find out that HMRC costs about £4bn to run annually. Put another way, it spends just over half a penny to collect each £1 of tax revenue. Value for money? You decide.