January income Tax hits record high of 21.9bn

January income tax hits record high of 21.9bn

The Treasury is reaping the rewards of freezing tax thresholds as revenue from income tax rose by a third to a record £21.9bn last month

This reduced public sector net borrowing with a higher than expected surplus of £5.4bn in January, against a predicted surplus of £500,000.

Meanwhile, the overall tax take for the month reached its highest level of £106.5bn, 19% up on the same month last year.

Income tax receipts were up 33% on the same month last year, highlighting the impact of frozen tax thresholds as more people are dragged into higher tax bands. This will only get worse as rates are frozen until 2028 and the threshold for the top rate of tax is being reduced to £125,140 from 6 April.

Receipts from self-assessment income tax and NICs for April 2022 to January 2023 were £55.9bn, which was £8.9bn higher than in the same period a year earlier.

Business taxes, including corporation tax and the new energy profits levy, have all helped to push up the amount of tax collected from businesses. The latest April 2022 to January 2023 figure shows total tax take of £68.8bn, which was £13.8bn higher than in the same period a year earlier.

Rising property prices, despite concerns that the cost of living crisis would dampen prices, has seen stamp duty land tax (SDLT) increase to £17.8bn so far this tax year, up £1.7bn. However, any comparison is distorted by SDLT reductions during the pandemic.

The sharp rise in income tax receipts is a dividend from the Chancellor Jeremy Hunt’s policy of freezing tax thresholds.

In line with previous months, inheritance tax continued to rise with total receipts of £5.9bn so far this year, up £600m in December and on track to exceed the 2021-22 tax year by £900m. The failure to change thresholds for years is drawing more and more estates into the death taxes.