Total UK tax receipts experience 43% annual fall

The total number of HMRC tax receipts in May saw a 43% fall in comparison to May 2019, according to new government figures.

Data showed there were 45,365 tax receipts during May last year, compared to just 25,988 in the month just gone. Within these figures, the total of income tax fell from 13,355 in May 2019 to 11,297 in May 2020, reflecting a drop of 15%.

Investment platform, AJ Bell, suggested the amount the nation paid in tax had fallen again in May as the country entered its second month of lockdown and “huge swathes of the population” were furloughed or saw their income hit.
 
“The Government now faces a perfect storm of plummeting tax receipts at the same time as spending has soared, meaning some very large plugs are going to have to be found to stem the holes in the public accounts,” AJ Bell personal finance analyst, Laura Suter, commented.
 
“April had already seen tax receipts fall off a cliff and this continued in May, with further drops in the amount of income tax, National Insurance, VAT and corporation tax we all paid.
 
“VAT once again saw the largest fall, as businesses made use of the Government’s VAT deferral scheme, with receipts down 106% as people could still claim refunds but held off paying their bills. Stamp Duty payments also saw a larger fall than in April, dropping by 56% compared to May 2019, as the housing market started to get moving again but few people had made it to completion in May after the lockdown.”

The investment platform also suggested the amount that the Government is spending on its furlough scheme almost doubled between April and May – rising from £5.2bn in April to £9.8bn in May.

AJ Bell highlighted that a further £6.8bn was spent on the self-employed version of the scheme, which was launched during May, taking the total cost of these two support schemes to £16.6bn in May alone.

“Falling taxes at the same time as rising spending leaves the Government with some tough sums to do,” Suter continued. “However, the public is willing to step up to help foot the bill, with our research (conducted in May among 2,001 respondents) showing that three-quarters of people would be prepared to pay more income tax to help fund the COVID-19 Government spending.

“On average, people would be willing to see a 4 percentage point hike in income tax, with two-thirds of people thinking we have a responsibility to contribute to help fund the additional Government spending.”

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