Quilter: HMRC data shows continued hit to pay packets but NI threshold increase could ease the pain

by | Aug 19, 2022

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Following the latest HMRC tax receipts and National Insurance contributions statistics published today, Shaun Moore, tax and financial planning expert at Quilter comments:

“The latest HMRC data shows receipts from Income Tax and National Insurance payments for April to July 2022 were £141.4bn, up £17.5bn compared to the same period a year earlier.

From 6th July the national insurance threshold, which is the level of earnings at which you have to start making contributions, became the same as the income tax threshold (known as the personal allowance).

The change essentially means that 30 million people pay less national insurance and enjoy an average of £330 more in their pay packet during the year. While certainly welcome considering runaway inflation and soaring energy prices this may be too little too late. With the Tory leadership race still rumbling on further tax cuts are likely on the cards.

Elsewhere, the data shows that the inheritance tax take continues to rise and is proving to be more and more lucrative for The Treasury. This morning’s figures show that IHT receipts for April to July 2022 were £2.4bn, up £0.3bn compared to the same period a year earlier.

Month on month increases have been a mainstay of this data set for a while showing the government is continuing to gradually increase tax revenues without significantly increasing the burden on tax payers. Part of the reason for this is that that property prices have increased so much that more and more are getting caught by the IHT net because Nil Rate Band and the Residence Nil Rate Band will remain frozen until 2026. No longer is IHT the preserve of the rich and many estates are having to pay the tax simply because of their property wealth, this is particularly evident in the southeast. The average house price across the whole of the UK is only around £40,000 below the Nil Rate Band.

Although house price data shows that a long awaited slowdown in property prices might be on the cards in the near future due to a lack of housing stock in the UK property prices may remain high simply because of the laws of supply and demand.” 

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