Katharine Arthur, Partner at haysmacintyre, comments, “Recent statistics show that HMRC’s annual total tax receipts have risen by over £175bn in the past 24 months, and while this may seem a stand-out figure, many tax professionals have expected this. The emphatic rise in tax intake year on year has been driven by a cocktail of factors – geopolitical, policy-based and economic. In particular, we are seeing the impact of the big freeze, with many tax threshold rates frozen until 2026, which has led to people tipping into higher brackets and therefore paying more tax. This has been compounded by inflation, explaining why total tax receipts have seemingly skyrocketed over the past two years.
“I think the timing of this is fascinating, principally because it is hard to predict what either of our two potential Prime Ministers will do to resolve the issues. We’ll likely see blame on the pandemic, or the ongoing conflict in Ukraine, for what is essentially a rather non-Conservative tax policy. Will the new chancellor feel obliged to lower tax rates? Time will tell.”