In January, the amount of income tax paid by sole traders and other self-employed individuals reached a record high of nearly £22bn, which is the largest monthly figure since records began in 1999 and one third higher than previous years. According to Blick Rothenberg, this total accounts for 8.9% of the total income tax received by the Treasury in the last 12 months. The Government’s tax and spending watchdog, the Office for Budget Responsibility, states that the record amount of tax paid by sole traders and other self-employed individuals has helped the Government raise £5.4bn more than it spent on public services in January. This figure is notably larger than the previous estimate of £400m. Concerns about the accuracy of OBR forecasts have arisen due to discrepancies between the Government’s and the OBR’s tax revenue estimates. However, bigger than expected tax receipts from VAT and PAYE mean that Chancellor Jeremy Hunt may have room to cut business taxes on Budget day (March 15). Ruth Gregory, deputy chief UK economist at Capital Economics suggests, “the figures suggest that Hunt will have some wriggle room in the budget to fund near-term tax cuts”.
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