“Tax officer may rub hands together for joy” – Tax revenues rise as HMRC focuses on debt | Personal finance | Finances

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Inheritance tax (IHT) revenues for April 2021 through October 2021 were £ 3.6 billion, up £ 600 million over the same period in 2020, according to HMRC data released this week. Ami Jack, Head of National Tax at Smith & Williamson, noted Rishi Sunak will likely welcome this news.

“The Treasury must do everything to top up its coffers”

Ms. Jack noted that the increasing amount raised is relatively unsurprising given recent government pledges.

“Following the Chancellor’s extensive spending commitments announced in the latest budget, the Treasury Department must do everything it can to top up its coffers to pay for the plans,” she said.

“The continued increase in IHT recoveries compared to the previous year is therefore welcomed by the Treasury. The budget was without major changes to the IHT in the personal tax announcements. Outside the budget, however, the government announced an increase of 1.25 percent.” in social security contributions and income tax on dividends from the 6th

With this in mind, Ms. Jack urged families to review their tax strategies in the face of possible changes or increases.

She continued, “Given the uncertain outlook for personal taxes, people should continue to carefully consider their tax planning and make the most of current allowances before introducing any further possible changes. There are a number of areas of tax planning that can help create an IHT – To reduce the invoice. “

READ MORE: Inheritance Tax: Brits Without Wills Miss Out On IHT Bill Lowering

“The helmsman may rub his hands together for joy”

IHT isn’t the only tax that is increasing. The same data from HMRC showed the British paid £ 392 billion in taxes between April and October this year, an increase of £ 99.8 billion over the same period last year – or 34 percent.

Income tax, social security, capital gains tax, and sales tax receipts had all increased, but additional analysis by Hargreaves Lansdown showed that stamp tax payments were particularly large. In England taxpayers paid £ 10.2 billion stamp duty, up to £ 4.1 billion a year.

Sarah Coles, a personal financial analyst at Hargreaves Lansdown, commented, “The huge surge in stamp duty this tax year shows the impact of the stamp duty holidays on their wringing.

“Taxes increased by a third in the first half of the tax year and stamp duty increased by two thirds. And while the numbers are hugely skewed by the impact of the pandemic, the dramatic effects of the stamp duty vacation are clear.

“It’s difficult to compare tax years because the government put in place a set of rules to make tax invoice management easier and another to encourage us to spend more money and buy more property.

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“We can see the huge impact of the stamp duty vacation, however. It has driven the average house price to a record high of £ 270,000 – up £ 28,000 in a year and higher transactions. This year we had the busiest September ever.” in the property market as buyers pounced on the final holiday deadline for stamp duty.

“In terms of stimulating the market and generating taxes, the move was clearly effective. However, if you try to get up or down the real estate ladder, the effects are likely to wear off far less welcome, buyers have nothing to gain from the short-term move, and it makes the home purchase challenge even more difficult. “

HMRC could also invest even more resources in tax collection in the coming months. Recently the National Audit Office produced a report on how well the HMRC handled tax debts during the pandemic.

Summing up the report, the National Audit Office said, “When the initial lockdown began, HMRC acted quickly, pausing collections to ease pressure on debtors, and working to increase its understanding of the impact of the pandemic on taxpayers to enhance.

“It then launched its Return to Collection campaign, making it easier for taxpayers to repay debt online, and will remain in place.

“HMRC is several years away from managing the tax debt impact of the pandemic and current staffing levels are unlikely to be sufficient to cope with the increased workload. It made efficiencies prior to the pandemic but did not improve overall levels of debt collection and it was written off. “She estimates that expanding private sector staff and capacity would have the greatest success in increasing debt collection.”

Dawn Register, Head of Tax Dispute Resolution at BDO, commented on this report.

“With many COVID-19 support efforts now being withdrawn, there is likely to be a heavy focus on collecting unpaid taxes regardless of whether HMRC remains understaffed,” she said.

“A lack of resources could even lead to more penalties for non-compliance, as HMRC will be under pressure to resolve situations quickly.

“The government is investing £ 100 million in HMRC to build its Taxpayer Protection Taskforce to tackle an estimated £ 5.2 billion in pandemic support fraud, but the current £ 42 billion tax debt dwarfs that number, and it must be worth investing more in the HMRC debt management service to collect that. In my experience, better service from HMRC’s debt team helps help businesses and individuals in trouble get back more, and faster, so this must be a good investment for the government in the long run. “

Ms. Register concluded by asking taxpayers to act where they can.

“The NOA report recognizes that tax debt for the pandemic will be outstanding for years and it is important that both the government and HMRC accept that this is a long-term problem,” she said.

“Tragic cases related to taxes owed on the disguised reimbursement loan fee resulted in HMRC approving plans for paying tax debts over five years, and a similar approach will be required for tax debts related to a pandemic.

“If HMRC allows much longer ‘time to pay’ arrangements for pandemic tax debts, far fewer individuals and businesses will be bankrupt and the government will begin paying off tax debts. Monthly or quarterly installment plans are generally helpful and convenient for both parties.

“Taxpayers with overdue tax bills shouldn’t bury their heads in the sand – if they haven’t received enforcement requests, they are likely to soon, which will create even more difficult times if not treated appropriately.”

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