June marks third highest month on record for govt borrowing

The past three months have seen the Government borrow more than double its entire borrowing amount for last year, as June marked the third highest month on record for borrowing, new figures have revealed.

HMRC data showed that the cost of supporting the economy and businesses through the COVID-19 crisis in June totalled £35.5bn, five times the level seen last June.

The figures also revealed that the total number of tax receipts in June dropped by 14% compared to the same month in 2019, with the data showing there were 41,730 tax receipts during June last year, compared to 35,753 last month. Within these figures, total income tax receipts fell from 13,036, to 12,857, reflecting a more modest fall of 2%.

Last month also saw a 31% annual drop in Stamp Duty Land Tax receipts, falling from 831 to 573 in 12 months, with this figure expected to fall further following the Government’s recent stamp duty holiday announcement.

Investment platform, AJ Bell, highlighted that the amount of money the Government is taking in tax is “edging higher” as lockdown eases, and as more businesses return to work and wean themselves off the Government’s support schemes.

“The total amount the Government took in tax in June rose by around 40% compared to May as people returned to work and income tax and national insurance payments increased,” AJ Bell personal finance analyst, Laura Suter, commented.

“While the total tax take by the Government is still 14% lower than the same month last year, that’s a dramatic improvement on April’s figures – when we were in the full grip of lockdown – which were more than 40% lower than the same month a year earlier. The picture over the past three months of lockdown is less rosy, with Government tax receipts a third lower than they were in the same three months last year – representing a £51bn hole in the Government’s accounts.

“In particular, stamp duty payments rose by almost 60% in June compared to last month as the housing market got moving again and some pent-up demand from lockdown was seen.

“That said, the tax take is still a third below where it was in June last year, so claims of a rampant rebound in the property market are wide of the mark. These figures will also now fall, after the Government’s announcement of a stamp duty break for many homebuyers, leaving a further cost for the Government to meet.”

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