SEISS & furlough schemes cost taxpayers £77billion – pensions to be targeted for the debts | Personal Finance | Finance
SEISS, furlough and other Government support measures have kept millions of people afloat over the last year or so but as lockdowns come to an end, the British taxpayer may begin to wonder if the eventual long-term costs were worth it. Today, HMRC released it’s latest tax receipt statistics and analysis of these figures showed worrying deficits.
“Some of the tax changes were natural consequences of the pandemic.
“We saw taxes on income rise much less than expected, because the pandemic meant the earnings of millions of people fell during the year. Inheritance tax, meanwhile, was up slightly – which sadly is likely to be due to the fact the death rate rose as the pandemic took hold.
“Restrictions fed into some of the most dramatic tax falls, so with non-essential shops closed, a major fall in retail spending contributed to the drop in VAT.
“Meanwhile, the almost-total halting of international travel for long periods of time was behind the spectacular fall in air passenger duty. And the instruction to ‘stay at home helped precipitate the big drop in fuel duty.”
Sarah went on to highlight that the Government will be keen to make up these shortfalls and pensions could be the main target for this.
Sarah concluded: “We found other things to do while we waited at home though, which helped push up the tax on both cigarettes and alcohol.
“Tax on cigarettes has followed a gradual downward trend for the best part of a decade, as tax levels rose and persuaded more people to stop smoking.
“This year it hit a new peak of almost £10billion. Alcohol duty, meanwhile, increased to £12.1billion, as the wine and spirits we drank at home more than offset the loss in tax from the beer and cider we’d usually drink in pubs.
“It wasn’t just the change in behaviour that has hit tax. Some policies introduced by the government during the crisis also meant a smaller tax take.
“The VAT payment deferment and the five percent rate for hospitality took a chunk out of VAT, while the stamp duty holiday meant the tax take fell by a quarter despite properties flying off the books.
“The figures reveal exactly why the Treasury is keen to start making up some of the shortfall with cuts in spending and new tax revenue. The scale of the figures involved means the government will be keen to make changes as soon as it feels the economy can cope with it.
“There’s plenty of speculation as to potential targets for tax changes – from a cut in pension tax relief to a hike in capital gains taxes. And while we can’t predict exactly what changes the Chancellor will make – or when he’ll bring them in – we can be certain that the tax environment isn’t going to get any more generous for savers and investors. It means it’s well worth considering taking advantage of your ISA and pension allowances this year while you still can.”