HMRC collects record £191bn in income tax
The taxman is raking in record amounts in income tax as the latest figures reveal Britons paid an extra £11bn in 2018/19.
Income tax receipts have soared to a record £191bn, according to figures published, a 6% increase from the previous year. Britons are paying almost 30% more income tax today than a decade ago.
An estimated £31.5bn of this comes from self-assessment income tax receipts, which were almost 12% higher than in 2017-18.
The bare facts show as a nation we are paying more income tax than ever before”
HM Revenue & Customs said this large jump was partly driven by changes in dividend taxation rules.
Tom Selby, senior analyst at investment platform AJ Bell, said: “Despite successive Governments making very public proclamations about reducing the income tax burden by repeatedly raising the personal allowance, the bare facts show as a nation we are paying more income tax than ever before.
“A number of factors have contributed to rising income tax bills in recent years, including the slashing of the dividend allowance from £5,000 to £2,000 and tax bands either being frozen or rising at a slower rate than wages. Both of these have resulted in more people being dragged into the higher and additional-rate tax brackets over the last decade or so.
“As income tax bills soar, people should consider using tax efficient savings vehicles like ISAs and pensions to limit these costs where possible.
“Certainly any dividend paying investments would benefit from the tax-free growth offered by ISAs and pensions, while increasing pension contributions when you move to a higher income tax band is a sensible and legitimate way to reduce the amount of income tax you pay.”
A freedom of information request revealed individuals in self-assessment owed £1.6bn in late tax payments to HM Revenue & Customs so far for the 2017/18 tax year.
The amount is expected eventually to surpass the £1.83bn recorded for the 2016/17 year as more tax returns are submitted, said accountancy firm UHY Hacker Young, which made the request.
The money owed by people who missed the tax payment deadline of 31 January has been rising for the past three years — up from £1.76bn in 2015/16 and £1.65bn the year before.
The figures also showed that increased scrutiny of tax avoidance schemes brought in £2.7bn of extra tax receipts for HMRC in 2018/19 – up 46% from £1.8bn in 2017/18 — including the revenue gained from investigating disguised remuneration schemes.
Tax avoidance schemes under investigation include film partnerships by some high net worth individuals, who invested in films to reduce their tax burden.
