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Bankers and insurance brokers face a bigger income tax burden than ever before, accounting for more of the Governments largest source of tax revenue than any other industry.
This is according to annual statistics published by HM Revenue & Customs (HMRC) on the distribution by industry of tax deducted from the pay cheques of employees each year.
The largest contribution in income tax by a considerable margin is the finance and insurance industry making up over 17 per cent of the total amount HMRC collected during the 2016/17 tax year, which is a record high, up 0.5 per cent on the amount taken in 2015/16.
Second on the list is the science, mathematics, technology and engineering industry. This area has increased by a fifth over the past five years, now accounting for 12.2 per cent of the Revenue’s income tax pot, making it the fastest growing contributor of income tax.
Car repairs accounted for the third largest share of tax contributions, accounting for 10.4 per cent of all contributions with manufacturing, followed by health and social work, rounding out the top five.
The least amount of income tax paid came from the agriculture, forestry and fishing industries accounting for just 0.3 per cent.
Workers pay tax on incomes over the personal allowance, which for the current tax year, is £11,850. This is one of the reasons why lower-paid work such as agriculture and mining is a small contributor to the total income tax pot.
Those in high paying fields such as banking and technology have to give away more of their earnings because of the 40 per cent tax rate which is applied to incomes above £46,351.
These figures do not include money taken for National Insurance, as this is a separate tax on earnings paid by both employees and employers which stops once an employee reaches the state pension age.
HM Revenue & Customs (HMRC) has warned taxpayers to declare any foreign income or profits on offshore assets before 30 September to avoid unwanted penalties.
In its latest report, the tax office said new legislation, known as ‘Requirement to Correct’, requires UK taxpayers to inform HMRC about any offshore income which could incur income tax, capital gains tax or inheritance tax.
It explains that many taxpayers may not be aware of their rights and requirements and could incur unexpected tax penalties.
For example, renting out a property abroad, transferring income and assets from one country to another or renting out a UK property while living abroad could incur some form of tax liability.
HMRC says the most common reasons for declaring offshore tax are in relation to property, investment income and moving money into the UK from abroad.
The Financial Secretary to the Treasury, Mel Stride MP, said: “Since 2010 we have secured over £2.8bn for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules.
“This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now.”
The notice comes ahead of the new Common Reporting Standard (CRS), which will allow more than 100 countries to share financial data. HMRC said this will “significantly enhance HMRC’s ability to detect offshore non-compliance”.
The CRS comes into effect from 1 October.
More than 320,000 taxpayers had their tax credits stopped or altered after they failed to inform HM Revenue & Customs (HMRC) of changes in circumstances, a new report has revealed. Read more
Over recent years the UK tax system has become incredibly complex and this has been recognised by the vast majority of UK businesses, according to research from the British Chamber of Commerce (BCC) Avalara. Read more
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After much deliberation, HM Revenue & Customs (HMRC) has finally shed light on the future of IR35 tax legislation in the private sector.
The consultation, which will “make sure that people who effectively work as employees pay the right amount of tax”, was launched last week.
This includes looking at how to increase compliance with the existing “off-payroll” working rules, known as IR35.
Similar rules came into force in the public sector in April last year, affecting public authorities who hire off-payroll contractors. This had a major effect on organisations such as the BBC, which had been paying many of its on-screen stars via Personal Service Companies (PSCs). Both the staff and BBC were asked to repay any tax due.
Recent evidence suggests that workers wrongly operating through a PSC could be costing the public fund £1.2 billion a year by 2023 as a result of people paying the incorrect amount of tax.
Financial Secretary to the Treasury, Mel Stride, said: “It’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy.
“But it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.
“That’s why we’re consulting carefully and welcome a wide range of opinions and evidence on how to tackle non-compliance.”
To read the consultation, please click here.
To find out how this might affect you, please get in touch.
HM Revenue & Customs (HMRC) has proposed a number of important changes to the ways in which it collects Capital Gains Tax (CGT) following the sale of residential properties. Read more