HMRC statistics that have been released show that for the first time since February, HMRC’s total tax receipts for a single month are higher than they were for the corresponding month last year, says tax and advisory firm Blick Rothenberg. Paul Haywood-Schiefer, a Manager at the firm comments on the news.
The total HMRC receipts for the month of September were £4bn more (£47bn) than the September 2019 (£43bn) receipts. This was mainly buoyed by a £3.3bn increase in Corporation Tax receipts as well as increases in PAYE (£572m) and NIC (£731m) receipts from the previous September.
Although it is good to see, it is important not to read too much into one month’s figures, and it certainly shouldn’t be seen as a turning point. In many ways this could be an fluke in terms of the statistics because even looking at what taxes has made this a good month, i.e. for the Corporation tax receipts in particular, the total tax take from this is still £3.1bn down over the course of the last 12 months (£57.5bn in 12 months to the end of September 2019 and £54.4bn in the 12 months to the end of September 2020).
PAYE and NIC have stabilised but these figures include furloughed workers wages, and both are still down over the course of the last 12 months (£2.7bn and £672m respectively). Although the Job Support Scheme is now replacing the furlough scheme, we could be seeing further falls in receipts from these two taxes in the coming months as many businesses won’t be able to sustain the longer term impact of the virus on their profits.
The six months from the beginning of April to the end of September have seen a £65bn decrease in the total tax take if that continues at the same pace, the treasury could be looking at a £130bn shortfall in the total tax take of the country by the end of March 2021. That would be an incredible 20.5% drop from the prior tax year’s tax receipts.
Although this is alarming, the end result may not be as bad as VAT receipts are gradually moving towards the normal monthly levels.
We are seven months on from the beginning of lockdown now and businesses have adapted as have people and with many new business springing up to meet new demands and needs arising out of the crisis. There is a long road to recovery ahead, and we may be seeing the start of this in the statistics.