Tax

Exchequer returns December 2016 - Peter Vale commentary

Peter Vale Peter Vale

Overall, tax receipts for 2016 are healthy and show the Exchequer in a strong position going into 2017.

Corporation tax continues to be the stand-out performer, with receipts 7% ahead of last year and well ahead of forecast, despite some anticipated repayments that hit the books in December. Probably the best news for the government is that the strong corporation tax receipts look sustainable, providing a buffer against any Brexit related dip in tax receipts elsewhere.

Income tax receipts also grew strongly over the previous year, reflecting both more numbers at work and higher wages. Higher than expected tax receipts from the self-employed are a feature of the strong income tax figures, which may be susceptible to any downturn precipitated by Brexit.

VAT results for the year are mixed, with the figures ahead of last year but lagging behind forecasts. Next month will be a key month to monitor as it picks up the November and December activity. 

Perhaps surprisingly, stamp duty did not perform as well as expected in 2016. With recent data showing an expected increase in house prices this year, we may see a recovery in stamp receipts, although nothing close to the levels witnessed during the boom years.

Of note also in the month of December itself is a strong capital gains tax performance, reflecting both an increase in activity and asset prices in general in 2016.