Understanding UK Tax Revenues: A Closer Look at HMRC’s 2023-24 Performance
As accountants at Cutts and Co, it is crucial to stay abreast of the latest trends and figures in UK tax revenues. The 2023 to 2024 financial year has seen significant developments in tax collection, and this blog will delve into the key statistics and insights provided by HM Revenue and Customs and other authoritative sources.
Total Tax Revenues
In the 2023 to 2024 financial year, HMRC reported a substantial increase in tax revenues. The total tax receipts amounted to 843.3 billion pounds, marking an increase of 29.4 billion pounds or 3.5 percent compared to the previous year.
Breakdown of Tax Revenues
Income Tax and National Insurance Contributions continue to be the backbone of the UK’s tax revenue. These two sources combined accounted for 55 percent of the total tax revenues in 2023 to 2024. Here is a detailed breakdown.
Income Tax
Total income tax for 2023 to 2024 was 286.2 billion pounds, an increase of 28.2 billion pounds or 9.9 percent from the previous year. This significant rise is partly attributed to the fiscal drag effect resulting from frozen tax thresholds. The majority of income tax, 82.5 percent, comes from Pay As You Earn, followed by self assessment at 17.3 percent, and a minor proportion of 0.2 percent from simple assessment.
National Insurance Contributions
National Insurance Contributions contributed 180 billion pounds to the total revenue, highlighting their critical role in funding public services.
Other Significant Tax Sources
In addition to Income Tax and National Insurance Contributions, other key tax sources include the following.
Value Added Tax
Value Added Tax generated 170 billion pounds in 2023 to 2024, making it a substantial contributor to the UK’s tax coffers.
Corporation Tax
Corporation tax revenues were driven primarily by rate changes and amounted to 103 billion pounds, including 3 billion pounds from the Energy Profits Levy.
Council Tax and Other Duties
Council tax raised around 45 billion pounds, while fuel duty and business rates each contributed approximately 25 billion pounds.
Total Government Revenue
The total UK government revenue for 2023 to 2024 was around 1.095 trillion pounds, which is equivalent to 40 percent of the country’s Gross Domestic Product. This figure encompasses not only tax revenues but also other receipts such as income from public corporations and interest payments on government assets.
Tax Repayments
It is also important to note the amount of tax repayments made by HMRC. In 2023 to 2024, total tax repayments stood at 148.8 billion pounds, an increase of 18.5 billion pounds or 14.2 percent compared to the previous year. This highlights the efficiency and transparency of HMRC’s processes in ensuring that taxpayers receive their due refunds.
Implications for Taxpayers and Businesses
The data from HMRC and other sources provide valuable insights for taxpayers and businesses. Here are a few key takeaways.
Increased Tax Burden
The rise in income tax revenues, partly due to fiscal drag, means that many taxpayers may find themselves in higher tax brackets despite no increase in their real income.
Compliance
The significant amounts collected from Pay As You Earn and self assessment underscore the importance of accurate and timely tax submissions to avoid penalties.
Business Planning
For businesses, understanding the trends in corporation tax and other duties can help in strategic planning and ensuring compliance with tax regulations.
Conclusion
The 2023 to 2024 financial year has been marked by notable increases in tax revenues, with Income Tax and National Insurance Contributions remaining the primary sources. As accountants, it is essential to be aware of these trends to provide the best possible advice to our clients. At Cutts and Co, we are committed to helping you navigate the complexities of the UK tax system, ensuring you are compliant and making the most of available tax reliefs.
By staying informed about the latest tax statistics and trends, we can better serve our clients and contribute to the overall health of the UK’s economy. If you have any questions or need further guidance on how these changes might affect you, please do not hesitate to contact us.
