Our Massive Tax Debt to the HMRC...
The UK's tax debt owed to the UK Tax authority, the HMRC stood at £45.9 billion at the end of March 2023, an increase of £4.3 billion compared to the tax-debt balance at the end of March 2022. (Source).
An additional £5.7 billion of debt is currently being paid off through affordable instalments.
HMRC expects the debt levels to remain 'elevated' throughout 2023 and 2024...
It gets worse...
The value of new debt was over 50% higher in 2021 to 2022 compared to the average for the tax years from April 2017 to March 2020.
And sadly the majority of tax debt is owed by small and medium sized businesses. So we are talking about increasing amount debts owed by ordinary working people, with the average debt owed increasing in size
This isn't because of a decrease in people submitting tax returns, the levels of submittals has remained stable over time, but there are more people who can't pay once they've submitted their returns.
This suggests people are willing to comply and pay their tax, but they simply lack the means to do so!
Taxes too high for small-medium sized businesses and the self-employed...?
I've thought this for a while now... with the self-employed tax threshold set at just under £13K, or a massive £5K short of anything like a living wage, it's basically just a fact of life that any self-employed person earning around the £20K mark or less isn't going to be able to pay tax, basically, well, because they can't afford it.
And I don't know much about being a small business owner but I can only imagine how much of a struggle it must be with rates, VAT, minimum wage increases (I mean fair enough, but tough if you're a small business, rates, and the economy not being quite the same since Covid.
HMRC can't keep up!!!
HMRC notes that the volume of new debt exceeds the level at which we are able to resolve it.
I'm surprised they are so relaxed, but then again it's not evasion or avoidance that's the problem here, this is all easy money for the HMRC to claw back at any time over the next several years, with interest of course.
So what they hell do they care.
And who knows what measures are down the line to enable easier collection in the future, anyone who owes a tax debt is very unlikely to get it written off, you need bankruptcy for that.
But it just seems to me that a society in which £50 billion of tax can't be paid is one which is based on a fundamentally flawed system!
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Some small businesses I notice for example have to invoice 200k, just to take home 100k or less. The taxation is out of control
That is mental - here it's £85K until VAT kicks in so if you hit that yr gonna struggle until you clear £110!
This sounds a bit like student debt, I wonder how people will ever get straight, or will they even try.
I don't the interest is too bad but it can't be easy!
Just think of those poor people on £100k who struggle to put their kids through private school! That's who the government seem more worried about. Taxes are a fact of life, but they need to be reasonable. There are millionaires who will willingly pay more, but others will lobby against that. Let's see if Labour can do better.
Tough for them to do worse. I think anyone earning £100K a year and strugling might need some FA!
In the end it is the average citizen who pays the debt, indebting future generations. How will small businesses be able to resist taxes...
In the end they will have to pay!