‘Eye-popping figures’ in latest tax receipt data

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “There were some truly eye-popping figures in today’s receipt data with spectacular surges in self-assessment income tax and capital gains.

“January is always a bumper month due to the self-assessment tax return deadline, but we saw all-time highs hit for both taxes.

“Clearly people have worked hard to get their forms over the line before January 31.

“HMRC has said though that given that many payments will be made very close to the deadline, it’s best to draw long-term comparisons by viewing January and February figures together, so it will be interesting to see what next month’s data holds.

“Capital gains tax receipts were just a whisper below £17 billion in January – a sign that allowance cuts and rate hikes are showing their teeth.

“However, there are ways that you can deal with this. You can realise gains gradually and take advantage of annual allowances.

“You can then use the Bed and ISA process to reinvest in an ISA, where gains and dividends are tax-free.

“For any new investments, then a stocks and shares ISA is a good option.

“Contributing to a pension is another tax efficient way of building your wealth without having to worry about capital gains or dividend taxes, though you won’t be able to access the money in a pension until at least the age of 55.

“Inheritance tax receipts continued to swell – up to £7.1bn for the year so far.

“It looks highly likely that this will be another record-breaking year for receipts as frozen thresholds draw more estates into paying this tax.

“If you think your family may have to deal with inheritance tax in the future, then you can make use of the various gifting allowances available to you.

“This will not just help mitigate a future IHT bill, it may also give you the opportunity to help loved ones meet financial goals sooner, rather than leaving money to them in your will.

“It also gives you the opportunity to see how they deal with the money and this may influence your future plans.

“It is, however, vital not to give away too much as this risks you struggling later on.

“Any gifting needs to take account of the fact that you may need care in the future, for instance.

“Speaking to a financial adviser can help you put a plan in place.”