Treasury revenue hits record levels

Tuesday 25 August 2015

New figures from Her Majesty’s Revenue and Customs (HMRC) have revealed that revenue from taxes has reached a record high.

Overall, the Treasury received £515.3 billion in the 2014/15 financial year, up from £493.6 billion in 2013/14, which represents a 4.4 per cent increase. In fact, the £18.5 billion collected in July alone was highest amount on record. The amounts of VAT and corporate tax paid also rose over the period.

These increases have been attributed to a surge in payments between April and July, when the amount of money coming in surpassed the Office of Budget Responsibility’s forecast for the entire financial year. Tax receipts for July 2014 were reported to be £17.6 billion.

Public sector finances have now reported a surplus for the first time since July 2012. While the public sector often reports a financial surplus in July, the Office for National Statistics has reported that the surplus is valued at £1.29 billion - the largest since records began in 1997. However, since Reuters’ economists had previously estimated that the surplus would be £1.3 billion, the news is not entirely unexpected.

A substantial rise in the amount of tax paid by contractors and freelancers has also been reported, which seems to have contributed to the headline figures.

Chancellor George Osborne welcomed the news and said: "With more tax coming in this month than the Government spent, borrowing so far is almost £7.5 billion lower than last year.

“The recovery is well-established, tax revenues are up and we have almost halved the deficit. But with debt over 80 per cent of gross domestic product (GDP) the job is not done. That is why we continue to work through our long-term economic plan to achieve a budget surplus and secure a better economic future for working people.”

For the current financial year, the deficit currently stands at £24 billion, which is 23 per cent less than the figure for 2014/15.

However, the UK’s debt is now valued at £1.5 trillion, having rising by £73 billion over the last 12 months. This is despite the fact that public sector borrowing has fallen by 23 per cent over the past financial year, and has now reached £24 billion.

The announcement seems to have come as a welcome relief to Mr Osborne, who has recently been criticised by the Treasury’s Select Committee for his failure to explain the potential impact of his summer Budget on household incomes.

Overall, it appears that the Treasury’s bid to increase its tax revenue is bearing fruit, although the news may not seem that surprising to any contractors who have recently completed their annual tax returns.

While the latest figures are not conclusive proof that the UK economy is recovering, they certainly seem to offer support to the chancellor’s claims that his strategy is working. However it is achieved, a boost in the economy is likely to benefit contractors across a variety of sectors, and as such will be welcome news.

By Victoria McDonnell

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