Corporation tax take up 26% to record £84.7bn
HMRC has reported a massive hike in corporation tax receipts for 2022-23, rising by £17.3bn to £84.7bn
Sara White, Editor, Accountancy Daily
The record tax revenue was largely driven by a strong post-pandemic recovery in the economy, a sharp increase in offshore receipts, and the introduction of the energy profits levy, which raised £2.3bn in the first year of operation, HMRC said. These figures are likely to rise over the next few years with the hike in corporation tax rate to 25% from April 2023.
Pre-pandemic the corporation tax receipts were fairly static around the £54bn mark between 2017 and 2020. In 2021-22, a total £64.5bn was raised highlighting the large increase in tax take in just 12 months.
Offshore corporation tax receipts were £6.6bn in financial year 2022-23, a sharp increase of £4.6bnn (230%) on the previous year. This was driven by high oil and gas prices, which produced excessive energy companies’ profits.
Over a fifth of corporation tax receipts were paid by the financial and insurance sectors alone, including the bank levy and bank surcharge, accounting for £18.4bn or 22% of total tax.
The second largest business taxpayer was the mining sector, with £10.6bn of corporation tax paid, followed by the wholesale and retail trade with £8.7bn of total receipts, up 11% on the previous year. This was followed by professional services, scientific and technical; and administration and social services.
There was a 20% increase in total capital allowance claims in financial year 2021-22, partly due to the super-deduction, which contributed over £30bn. This tax break was introduced during the pandemic to drive business investment and was withdrawn in April 2023.
It allowed eligible investment incurred from 1 April 2021 to receive higher capital allowances than normal with a 130% rate in the first year, compared to either 100% through the annual investment allowance or 18% writing-down allowance that had been available before.
Ben Knock, managing director, VAT compliance, consulting, and reclaim at Ryan, said: ‘The latest HMRC figures on corporation tax highlight the importance of businesses not only being aware of their tax obligations but also the various reliefs available.
‘VAT reclaims, for instance, can significantly impact a company’s financial health. It’s essential for businesses to explore these avenues and ensure they are maximising their tax benefits while remaining compliant. Staying informed about available reliefs can make a substantial difference to their bottom line.’