Latest HMRC tax receipts and NI Contributions show shocking drop of £70bn

George Bull, Tax Consultant, RSM, comments on the latest HMRC Tax Receipts & National Insurance Contributions published today:

‘The latest figures for HMRC tax receipts and NICs, published by National Statistics, compare April-October 2020 tax receipts with those for April-October 2019. The pattern which emerges, reflecting coronavirus furlough and job losses, reduced retail expenditure, holidays and air travel, is not surprising. However, the amount by which taxes have dropped since 2019 is shocking, with a £10bn deficit in income tax and National Insurance Contributions alone. The VAT reduction is even worse, pushing towards £40bn, though deferrals will be a part of this.

‘Taken together, the 14 taxes covered in the report show a reduction of £70.6 billion compared with the equivalent period in 2019. The figures will be particularly unwelcome to Chancellor of the Exchequer Rishi Sunak as they further limit his scope for action as he prepares to deliver his economic forecast on Wednesday 25 November.

‘Some of the shortfall will reflect time-to-pay agreements negotiated by businesses. Provided those businesses survive, this tax will become payable in due course. It will be interesting to see how the Chancellor factors this into next week’s statement.

‘Of the smaller taxes, stamp taxes fell when the property market stalled during the first lockdown. Fuel duty naturally declined as people undertook fewer road journeys.

‘Two of the 14 taxes have increased. The figures show increases in the amount of tobacco and alcohol duty collected by HMRC. The slight rise in alcohol duty will be accounted for as people shifted their purchases from restaurants and pubs to supermarkets and off-licences. It also seems that people in the UK are smoking more.’