Laura Suter, head of personal finance at AJ Bell, comments on the latest figures on how much tax the nation is paying:
“These figures highlight Rishi Sunak’s stealth taxes in action – with frozen bands for a whole host of taxes meaning bigger tax bills for many. The total amount the government took in tax in the past year hit a record high of £786.6bn, almost 10% higher than the previous year, amounting to more than £71bn more in taxes.
“The nation’s income tax bill hit a new high, adding £26bn more to the bill from last year and taking the total paid in income tax to £246.8bn. The frozen income tax bands mean more people are being nudged into higher tax brackets, particularly with pay rising as wages struggle to keep pace with inflation. On top of that, the temporary increase in National Insurance for the past year lead to a hike in the government’s tax take there, with another £18bn added to the amount the nation paid in NI.
“The current government has cracked down on so-called wealth taxes, by slashing the tax-free allowances on capital gains tax and dividend tax from this month. But even before the impact of that could be felt, the amount paid in capital gains tax hit a new record in the past year, with almost £3bn more paid in tax on gains. This is partly due to income tax bands being frozen, meaning that more people are pushed into a higher tax band and so pay a higher capital gains tax rate on their gains. But it also reflects rising asset prices, particularly in the housing market, where landlords face paying capital gains tax on their investment properties when they sell. Now the tax-free allowance has been slashed to £6,000, the government will be raking in far more in CGT receipts in the coming year.
“The level of death taxes the nation is paying hit its second highest month on record in March, with £679m clocked up in inheritance tax payments in March. The amount the government received in inheritance tax over the past year is £1bn higher than a year earlier – reaching £7.1bn for the 2022/23 financial year.
“The frozen nil rate band for inheritance tax is already hitting people’s tax bills, and as the nil rate band has now been frozen until 2028, this tax take is only going to get higher and higher, with more people dragged into paying the 40% tax on their estate. On top of that, house prices and asset prices have risen higher, meaning more people will find their estate is valued at enough to be subject to hefty death taxes.”
