Exclusive: Steep surge in income tax and national insurance as higher taxes bite in cost of living
The combined amount of Income Tax and National Insurance paid in the last twelve months has soared by 13 per cent to more than £387bn, new figures from HMRC show.
The latest data from the taxman comes amidst the growing cost-of-living crisis, the Government is now likely to come under increasing pressure to alleviate the burden that families and individuals up and down the country are facing with rising bills.
The figures show that, in the twelve months to this April, total Income Tax paid has risen by 15 per cent to nearly £228bn, whilst total National Insurance receipts have increased by 10 per cent to just shy of £160bn.
In particular, the total amount of National Insurance paid in April was 15 per cent higher than in March, due to the rise in the National Insurance rate by 1.25 per cent starting to take effect.
With Brits now paying record levels of tax, and the cost-of-living crisis continuing to bite, leading tax experts have warned that higher than ever tax bills will be increasing the financial pressures many individuals are facing.
Discussing the HMRC data with Morning Wire today, Katharine Arthur, Partner and Head of Private Client at accountancy firm haysmacintyre, said: “The latest set of tax receipts from HMRC highlight just how much National Insurance contributions have spiked by since the rate increase at the start of April 2022.”
“With people now paying a lofty £160bn in National Insurance over the last twelve months, up £14bn on the year before, it is undoubtable that rising costs combined with record tax levels will be hitting taxpayers hard,” Arthur added.
She also pointed out that inflation and soaring house prices are having a significant impact on the increased tax revenues coming into HMRC’s coffers.
“Wages and salaries are rising to keep pace with the inflation rate, causing Income Tax and National Insurance to spike, and with house prices remaining high, annual Inheritance Tax receipts continue to break new records.”
With inflation showing no signs of letting up any time soon, Arthur argued that taxes are likely to continue rising for months to come.
“These latest figures feed into the bigger question of what the Government will do to mitigate the cost-of-living crisis.”
Katharine Arthur
While there has been much speculation that the Government is considering introducing a so-called ‘Windfall Tax’ on energy companies, who have seen profits rise over the past few months, she said the Government should be doing more to help lessen the burden that individuals are likely to bear for the rest of this year.
“Although the upcoming increase to the National Insurance threshold this July will, to some extent, level-off the tax increases, for many people it will not be enough.”
“While nothing is supposedly ‘off the table’, we need to understand what is actually on the table and how it will be implemented to help Brits through these difficult times,” Arthur concluded.