HMRC Announce Increase in Income Tax Due to Shortfall in Tax Collection

Date: September 28, 2009

Recent hope alluring to the recovery from the current UK recession is now overshadowed by announcements from HMRC that steep increases in income tax payments will be required for the coming years.

HMRC has published the latest revenue figures that are shown to be at its lowest level in five years with a fall of £45bn to £394bn during this fiscal year. This is explained by the recent increase of redundancies, business fall of profits, and often business losses, for investors in the housing market and the mortgage drop, all of which is leaving HMRC with no other option than to increase taxes that those remaining in employment will have to pay. Recent government borrowing in the hundreds of billions of pounds is clearly contributing to the long term ability for the country to recover from recession as this borrowing will need to be paid back.

The loss of income from capital gains tax will also show a decline in taxes collected by HMRC further exasperating the problems.

Income tax is the biggest single source of HMRC revenue so all UK workers need to be prepared for any rises, particularly independent contractors and freelancers who may need to budget scrupulously for these tax increases.

By utilising the services of an umbrella company tax and HMRC regulatory changes are always taken into account on behalf of our contractors, however financial planning is more important than ever as taxes are set to rise.

Unfortunately for tax payers there is no opportunity of escape despite the upcoming elections as all major political parties agree that the Government need more money coming in and taxation is the primary source of income.

Concerns will no doubt rear up relating to previous ‘super taxes’ in the 1970’s where over £50k earners were heavily taxed creating a drain in the country’s resources as high earners moved accounts offshore and moved themselves abroad.