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HMRC tax take hits £540bn fuelled by high employment

  • 23/08/2016
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HMRC tax take hits £540bn fuelled by high employment
HMRC’s total year-on-year tax receipts have grown by £17.5bn or 3.3% to £540bn, running 1.4% or £9bn ahead of inflation, say accountants.

London chartered accountants Blick Rothenberg said the rising tax take from employment is driven by the lowest unemployment rate since October 2005.

Paul Haywood-Schiefer, assistant manager at Blick Rothenberg, added: “Part of this increase can be attributed to falling corporation tax rates, encouraging some reinvestment of profits in labour.”

The firm said there is a mixed picture on individual tax, with self-assessment income tax receipts sharply down in July to £229m.

Frank Nash, partner at the same firm, said: “This is normally a good month as self-employed or landlords make one of their bi-annual Payments on Account. The reason for the fall is uncertain and could simply be down to delayed payments or delayed collection processes, which may be made good in the current month.

“There has also been a trend over the last two years for many self-employed businesses to convert to a limited company, as corporation tax rates have now fallen to 20% and are set to fall further. These businesses cease to pay Self-Assessment income tax and will no longer have to make their July payments.”

On property, Nash said: “However, residential property transactions over the three months to July 2016 have shown the lowest numbers over the last three years.”

He added: “Property sales have fallen by 56,300 in the four months to July 2016 compared with the four months to July 2015 and are actually down 52,340 on the sales in the same four months in 2014. For the month of July, property transactions were the lowest in three years, but mid-summer is traditionally quiet.”

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