The Great Recession in the UK will diminish the taxman’s take for years to come.
Low growth in wages, the rise of low-paid self-employment, and a limited recovery in corporate earnings have resulted in tax payments which are below predictions.
The prognosis was made by the Government’s independent fiscal watchdog, the Office for Budget Responsibility.
Its annual report said it was “difficult to judge when the economy will fully recover from this post-crisis hangover.”
But the agency noted that property stamp duties had gone up more than expected as Britain’s housing market went into lift-off.
While the OBR said that quite a lot of employment growth had been in self-employment where for many low earnings were not higher than the personal allowance, HMRC reported that the proportion of the self-employed reporting incomes below the personal allowance jumped from 21% in 2007 to 35% in 2011-12.
"The amount of corporation tax receipts has fallen because the rate has been lowered, but you've also had a fall in the effective rate - in particular for financial firms. Because they've accumulated so many losses over the course of the recession, even as their profits start to improve, it takes a long time before they start paying tax again," said OBR chairman Robert Chote.
Separately on Thursday, HMRC announced an increase in the "tax gap", which is the difference between the amount of tax it believes it should collect, and actual receipts. The gap rose to £34bn in the year to April 2013, from £33bn the previous year.
