Govt reports huge fall in tax receipts

The total tax receipts taken by the Government in April plummeted by 42% compared to the same month last year, according to new analysis by AJ Bell.

The investment platform indicated that income tax receipts dropped by 21% while National Insurance payments fell 18% during the month, as people lost their jobs, staff were furloughed and businesses used Government coronavirus schemes to defer tax.

Government data showed that the total of HMRC receipts fell from 60,950 in April 2019 to 35,112 last month, while the total number of income tax receipts had dropped from 18,346 to 14,551 in 12 months

The greatest difference was seen in VAT, as AJ Bell highlighted receipts fell by 107% due to the Government’s COVID-19 deferral scheme.

AJ Bell personal finance analyst, Laura Suter, commented: “The first sign of the lockdown crunch on the Government’s tax take can be seen in its release of how much tax the nation paid in April – which has fallen off a cliff compared to last year.

“The biggest fall was in VAT, with the total tax dropping 107% as companies deferred their payments under the Government’s package of measures to help boost firms’ cashflow during lockdown.

“The fact entire industries are closed has also hit the public purse, with beer duties having fallen 69% while pubs and restaurants keep their doors shut, and air passenger duty payments dropping 90% while the travel industry has ground to a halt. The impact of the property market being shut has also hit tax receipts, with a 43% fall in stamp duty during April.

“The Government faces a huge challenge ahead to deal with these falling tax receipts while also having to pay for its numerous support schemes during the current crisis. So far around £5.2bn has been spent on the Coronavirus Job Retention Scheme, and it’s inevitable the public will see tax rises to help meet the shortfall.”

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