Self-assessors buck rising tax trend
However, in among the tax news was the fact that receipts from self-assessment have actually fallen over the year? So why is this, and does self-assessment hold the secret to paying less tax?
Record tax receiptsThe Treasury had a fantastic month in general in January. According to The Telegraph, overall receipts were £60.9 billion, which is the largest sum since the Office for National Statistics started recording it in 1998.
January is always a big month, because that's when the lion's share of self-assessment and corporation tax receipts come in - corporation tax was up 15% this year.
However it was also boosted by rises in other types of tax. VAT was up £1.5 billion for the month alone. Part of this is now because VAT now stands at a massive 20%, and part of the rise is due to the fact that retail spending around the turn of the year surprised on the upside.
Meanwhile capital gains tax soared 26%, partly as a result of the increase in the rate for higher earners in June 2010 to 28%. It also rose as those who are taxed on income at 50%, converted as much of their income as possible to capital gains so they would be taxed at the lower rate of 28%.
Even national insurance contributions were up 3%, despite the fact that so few of us have received a pay rise.
Self-assessmentHowever, receipts from self-assessment returns were down 4.7% to £509 million (despite the introduction of the new 50p rate for higher earners). It raises the question of whether self-assessment holds the secret to paying less tax.
Sadly, it seems not.
It's far more likely to be a reflection of the fact that many people rushed through their gains before the start of this tax year. They extracted dividends before April 2010, so they could pay the lower rate before the 50p tax kicked in. This effectively increased receipts this time last year, and depressed them this year - simple as that. Similarly, there will be those who refuse to extract dividends until the 50p rate is removed.
Tim Davies, head of tax at Mazars told AOL: "Since the 50% tax rate was introduced we have seen people becoming more interested in tax planning ideas."
He added: "The lower receipts may also be down to the fact that self-employed entrepreneurs paying through self-assessment are making less profit, because they have to put more of their own money back into the business."
The answer to paying less tax is sadly not that easy. We're back to taking advantage of tax-free savings, planning to avoid any taxes we can - such as inheritance tax, taking advantage of salary sacrifice to reduce our income tax bill, and otherwise sucking it up.