Record UK tax bonanza boosted by CGT and offshore hauls
Almost £3bn has now been recovered from offshore tax evaders has bolstered record UK tax collection figures.
According to official statistics released by HMRC earlier today, the difference between the tax due and that collected by HMRC – known as the ‘tax gap’ – fell to a record low of 6% in 2015 to 2016.
Since 2010, HMRC has now secured almost £160bn in additional tax revenue as a result of actions to tackle tax evasion, tax avoidance, and non-compliance, including £2.8bn from offshore tax evaders, through action both at home and abroad.
Looking at the most recent figures HMRC said that if the tax gap had remained at the 2005 to 2006 level of 7.9%, it would have grown to £46bn – a £12bn difference in cash terms.
Mel Stride, financial secretary to the Treasury and Paymaster General said that collecting the right tax is “crucial” to fund the UK’s public services.
“Today’s data shows how far we have come in tackling avoidance, evasion and non-compliance, but there is still more to do and we will continue to take action to ensure that everyone pays the tax they owe.”
HMRC added that the tax gap fall follows the introduction of 75 measures over the last 7 years to reduce tax avoidance, evasion and non-compliance, including:
- cracking down on avoidance by multinationals to ensure companies pay the right amount of tax under UK law
- introducing tough new criminal offences that make it easier to prosecute both evaders and companies that fail to prevent evasion, as well as significantly increasing penalties
- introducing a new penalty for those who enable the use of tax avoidance schemes that are later defeated by HMRC
- investing £800m in HMRC’s compliance operations, which are expected to bring in an additional £7.2bn in tax by 2020 to 2021
Record CGT levels
As well as the record drop in the tax gap the latest HMRC statistics also show record levels of capital gains tax paid with a record number of people paying capital gains tax (CGT) – 239,000 individuals paid £7.74bin in 2015/16.
There was also a record amount of CGT paid – £8.347bn – 20% rise from previous year
Danny Cox, Chartered Financial Planner at Hargreaves Lansdown, said: “Record numbers of payers and receipts show capital gains tax is making an average 17% dent in investor’s profits.
“The best way to avoid CGT is to shelter your investments from tax from outset using ISA or SIPP. CGT may not be a consideration when you first start investing, however the more you invest and the longer you invest for, the greater the problem tax on your gains will become.
“Tax influences investment decisions and investors are often reluctant to take profits from holdings which are heavy with gains. All the more reason to shelter shares and funds in ISA so your portfolio is tax worry free.”