FIGURES showing increasing yields in key areas of tax are pointing to improving economic performance, BDO has claimed in its first Tax Tracker report.
An increase in income tax receipts, up 4.1% on July last year at £18.6bn, illustrated an improving job market, while stamp taxes, paid on economic activity such as property and share transactions, were up 11.7% at £1.3bn. They were bolstered by the strength of the London property market and the buoyancy of UK equity markets, the top ten firm said.
BDO based its conclusions on official figures from the Office for National Statistics.
VAT receipts showed an increasing number of transactions in the economy, and hit £8.9bn. Presented as a three month average (May-July 2014), in order to smooth out fluctuating payment dates within a quarter, receipts were up 7.4% on a three month average compared to the same three month period last year.
Although corporation tax receipts of £7.3bn represented a seemingly disappointing 3.9% fall compared to July last year, the shortfall can partly be attributed to the 1% reduction in the headline rate in April to 21%. The direct impact of such a reduction would have been a 4.5% decrease, so July’s fall in receipts still represents an increase in corporate output, BDO said.
Tax partner Richard Rose said: “Although the overall picture in terms of borrowing is less positive than forecasted these July figures are still encouraging.
“An increase in VAT receipts and stamp taxes compared to the same period last year are a clear and direct indicator that the economy is picking up. Receipts from these transactional taxes respond more quickly than income and corporate tax receipts and the strong performance is a reflection of increasing confidence across the economy.”