Unusually, this Briefing will tell you nothing you actually need to know. But it may be eye-opening.
One response to our recent briefing on ATED was an enquiry about what it raised. Less than £100m, actually: which may sound a lot but which has to be seen in the context of total annual government tax revenues of getting on for five hundred thousand million pounds.
This got us looking at the statistics of tax. Where does it all come from? Probably not where you’d guess.
Selling indulgences on drinking, smoking and gambling brings in less than 5% of the total. IHT, Air Passenger Duty, Insurance Premium Tax and Customs Duties each bring in less than 0.5% of the total. SDLT is under 2%. So abolish all of those annoying little taxes and throw in CGT for good measure and you’d still be looking at less than 10% of the total yield.
Next biggest is Fuel Duties (about 5%): but really the only taxes which matter in quantitative terms are Corporation Tax, VAT, NIC and Income Tax. You’d probably have guessed that Income Tax, at about 1/3 of the total, and VAT (about 20%) would be up there. You’d perhaps be surprised to learn that Corporation Tax receipts are only about a quarter of the Income Tax total; and surprised to discover that National Insurance Contributions (which after all are in part Income Tax by another name and in part a tax on jobs) collects pretty much the same as VAT. Which explains why the government hasn’t yet bitten the bullet to do the sensible thing – abolish it and merge it with Income Tax.
So now you know. We couldn’t bring ourselves to look at what it’s all spent on: far too depressing.
