Following the latest HMRC tax receipts and National Insurance contributions statistics, Shaun Moore, tax and financial planning expert at Quilter has commented:
“The latest HMRC data shows receipts from Income Tax and National Insurance payments for April to June 2022 were £98.2bn, up £13.4bn compared to the same period a year earlier. This month’s data highlights the continued impact on pay packets from the third month of increased NI contributions as a result of the government’s 1.25 percentage point hike which has been in place since 6 April. These receipts were also boosted by a rise in the number of paid employees in the last month, as well as a steady increase in monthly pay.
“However, three months on from the National Insurance hike, the National Insurance Primary Threshold has been increased to £12,570 to be in line with the Income Tax threshold. While the hike will have made an unwelcome dent in people’s take home pay over the past few months, this will now ease somewhat. As the threshold has been increased we would expect to see a dip in NI payments from this month onwards.
“Elsewhere, however, the government will be making up for these losses somewhat. Inheritance Tax has increasingly become a lucrative area for the Treasury and this month has been no different. This morning’s figures show that IHT receipts for April to June 2022 were £1.8bn, up £0.3bn compared to the same period a year earlier.
“IHT receipts have seen month on month increases for a long while now, showing the government continues to gradually increase tax revenues without significantly increasing the burden on tax payers. Property prices have soared in recent years and the average price has crept ever closer to the standard NRB, yet the NRB and RNRB remain frozen until 2026.
“As a result, IHT is no longer just a tax on wealthier individuals and with house prices still marching higher there will be more and more people unexpectedly caught by the IHT net. Just this morning the government released its latest house price data which showed the average house now costs £283,496 – £32,000 more than the same period last year and just £41,504 below the NRB.
“The widely anticipated slowdown in house prices is yet to materialise, but it may appear in the coming months as rising inflation, Bank of England rate hikes and the high costs of moving home put off prospective buyers. However, even if we do see a fall in house prices it would be unlikely to reduce the IHT burden for some time yet.”