GOVERNMENT BORROWING hit its lowest rate for seven years in June as income tax receipts rose in the same month to the highest level since records began, figures from the Office for National Statistics show.
Borrowing, excluding banks, fell by 8.3% to £9.4bn in June, as income tax receipts increased 2.5% to £11.5bn. Alongside that, corporation tax receipts jumped 13.9% to £1.7bn, also the highest level on record.
Last week, HM Revenue & Customs announced it collected a record £517.7bn in tax in 2014/15 – an increase of £12bn on the previous year – as a result of economic growth and the continued crackdown on tax evasion and avoidance.
Of the £517.7bn, some £163.1bn (32%) was sourced through income tax, followed by £113.9bn (22%) via VAT. Around £108bn (21%) came through National Insurance contributions, while just £41.4bn (8%) was generated by corporation tax. Approximately £27.2bn (5%) came from levies on hydrocarbon oils, with £64bn (12%) came through other taxes.
While the borrowing was at a seven-year low, it still fell short of economists’ expectations.
Rowena Crawford, a Senior Research Economist at the Institute for Fiscal Studies, said: “Today’s figures suggest that receipts this year continue to grow strongly compared to last year, as was forecast by the Office for Budget Responsibility alongside the Budget earlier this month.
“The picture for central government spending is, as ever, complicated by timing issues: spending has grown less rapidly so far this year than forecast for the year as a whole, but is expected to pick up over the course of the year. Taken together, the government looks so far this year to be on course to enjoy the fall in borrowing forecast by the OBR two weeks ago.”