I received a lot of positive feedback from last month’s blog with clients asking to share some more from the book titled “Follow the Money”.
As I pointed out previously the government raised £910 Billion through taxation in the 2022/23 tax year, two thirds came from Income Tax, National Insurance and VAT. Below is a list of the other main taxes and the revenue that they brought in.
· Corporation Tax £66 Billion
· Council Tax £42 Billion
· Business Rates £29 Billion
· Fuel Duty £25 Billion
· Stamp Duty £17 Billion
· Capital Gains Tax £16 Billion
· Alcohol Duty £13 Billion
· Tobacco Duty £11 Billion
· Road Tax £7 Billion
· Inheritance Tax £7 Billion
Aside from the ‘big three’ taxes the next largest tax on this list is corporation tax and it ‘only’ produced in the region of 7% of total tax revenue received…. This highlights that the big three taxes are so dominant and it’s likely that any additional major revenue that the government needs they will target these three taxes. However, this is not to say they won’t make any changes to any of the taxes above.
Over the years there have been many different types of taxes, some that lasted longer than others. I am sure some of you a familiar with the window tax (introduced 1696 abolished 1851) but maybe less so with the brick tax resulting in properties being built with larger bricks or the clock tax resulting in numerous clocks being on public display across our towns and villages. The point being is that taxation can cause individuals to change their behavior, and you have to think not only of the individual/company that pays the tax but the knock-on effect. The landlord was responsible for paying the window tax, but it effected his tenants as they had to pay higher rent or live in a property with bricked up windows. Think of VAT…. The shop keeper collects it and passes onto HMRC, but it is the consumer that pays it.
When I speak with clients the vast majority are happy to pay their fair share but I would say that there is always a frustration/irritation with Inheritance tax(IHT) and looking at how much it raises in revenue it appears that a government could makes changes and raise the lost revenue from somewhere else (IHT is less than 1% of total revenue) however It appears this is more of a it a political/ideological argument…..if the Conservative party scrapped IHT I could hear Labour Party shouting from the roof tops…….tax cut for millionaires!
I believe for any real change there has to be an understanding that a group of people will be worse off and a group of people better off. But you need to make sure that there are more people in the ‘better off camp’ and that the worse off group are able and willing to accept the change and don’t vote you out.
Now to my confession…. Usually writing a blog takes me hours, but for June’s Blog I decided to use AI and in particular ChatGPT. I asked it a question and within seconds it had written a blog for me on that subject….it took me a few minutes to tweak a couple of bits and add in a closing paragraph, but it was done within a short space of time. Now I did this deliberately as I knew In August blogs, I wanted to highlight the difference between what I write and AI’s output. June’s blog was titled ‘5 happy tips for retirement’ the content was accurate, and I was pleased with the points it made but it demonstrates the lack of a personal touch and didn’t have my own style. I am not sure how AI will affect us in the coming years, no doubt there will be many positives but also drawbacks. You could compare the evolution of AI to Darwin's Origin of Species ‘it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.’ This certainly resonates with me.