Government statistics issued yesterday show that HMRC tax receipts are £80bn higher than they were before the pandemic. Growth in tax returns was fuelled in part by a 35% year-on-year surge in the UK’s capital gain tax bill, which is up from £10.8bn to a record £14.6bn in the past year. This is owed largely to a hike in tax in entrepreneurs selling businesses. HMRC’s yield from capital gains tax has increased sharply in recent years, with the latest total almost double the £8.1bn collected five years ago and more than treble the £4bn collected decade ago. Self-assessment income tax receipts collected in January and February 2022 [the two months when people were due to pay it over due to extended deadlines] saw a small reduction of just over £800 million from the same two months in 2021. Whilst the self-assessment receipts have dipped, capital gains tax receipts are positively buoyant. Rules on paying tax on property transactions throughout the year mean that there is now a steady inflow each month. Total receipts are up nearly £5 billion (£4.8 bn) in the last 12 months. There was much speculation following the Office of Tax Simplification’s suggestion for an alignment of capital gains tax rates to income tax rates, and this has led to additional trades with investors acting to bank gains before a tax rise that never came.

Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of March 2022 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.