HMRC receipts fell 43% in May
24 June 2020
The government tax take plummeted by 43% in May, as the effects of Covid-19 and the furlough scheme hit tax receipts.
Total HMRC receipts fell to £26 billion in May, down from £45.3 billion a year earlier, as the country entered its second month of lockdown and huge swathes of the population were furloughed or saw their income hit.
VAT suffered the largest fall, continuing the trend from April, with receipts down 106% year-on-year as businesses made use of the government’s VAT deferral scheme.
The amount of income tax paid in May also dropped a further 22% on April’s figures, and was down 15% on the same month of the previous year. Stamp Duty payments also witnessed a larger fall than in April, dropping 56% compared to May 2019.
At the same time, the figures revealed the amount the government spent on its furlough scheme almost doubled between April and May, rising from £5.2 billion in April to £9.8 billion last month. A further £6.8 billion was spent on the self-employed scheme, taking the total cost of government support to £16.6 billion in May alone.
Laura Suter, personal finance analyst, AJ Bell, said the government now faces a “perfect storm” of plummeting tax receipts and soaring spending costs, leaving it under increasing pressure to stem the holes in the public coffers.
Suter said: “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.
“Falling taxes at the same time as rising spending leaves the Government with some tough sums to do. However, the public is willing to step up to help foot the bill, with our research 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.”
ATEB Consulting’s Steve Bailey looks at how the FCA’s view of suitability and what that means in practice for...
Paraplanners who have been furloughed and are concerned that their company will not have a job for them should...
The Supreme Court has ruled that a pension transfer made in ill health should not be subject to inheritance...