3. What’s changed in this release?

This section presents information on aspects of data or methodology that have been introduced or improved since the publication of the previous bulletin, along with supporting information users may find useful.

Self-assessed tax receipts

In both January and (to a lesser extent) July, receipts are particularly high due to the receipt of self-assessed Income Tax, Capital Gains Tax and self-assessed (Class 4) National Insurance contributions:

self-assessed Income Tax receipts in January 2019 were £14.7 billion, an increase of £1.9 billion compared with January 2018; this is the highest January on record (records began in January 2000)

Capital Gains Tax receipts in January 2019 were £6.8 billion, an increase of £1.2 billion compared with January 2018; this is the highest January on record (records began in January 1998)

combined self-assessed Income Tax and Capital Gains Tax receipts in January 2019 were £21.4 billion, an increase of £3.1 billion compared with January 2018; this is the highest January on record (records began in January 2000)

The revenue raised through self-assessed taxes, although affecting primarily January and July receipts, also tends to lead to high receipts in the following month (February and August respectively), although to a lesser degree.

The proportion of self-assessed taxes recorded in January and February can vary year-on-year and it is therefore advisable to consider data for the two months (January and February) together.

In January and February 2018, the government raised £24.5 billion in combined self-assessed Income Tax and Capital Gains Tax receipts (£18.4 billion in January and £6.1 billion in February).

Bank of England Asset Purchase Facility Fund

Dividend transfers from the Bank of England Asset Purchase Facility Fund (BEAPFF) to HM Treasury occur quarterly (in April, July, October and January).

Unusually in January 2019, this transfer was negative, such that we show a £0.1 billion dividend transfer from HM Treasury to the BEAPFF. This is not an indication of a call on HM Treasury’s guarantee of the scheme, more that the often lower January payover was offset by the other transfers between HM Treasury and the BEAPFF.

As with other such transactions between HM Treasury and Bank of England, these transactions are public sector borrowing neutral.

In the financial year-to-date April 2018 to January 2019, £8.0 billion in dividends has been transferred from the BEAPFF to HM Treasury, compared with £9.3 billion in the same period last year.

Changes to the recording of the Term Funding Scheme

The Term Funding Scheme (TFS) was introduced in September 2016, as a quantitative easing measure under the Bank of England Asset Purchase Facility Fund (APF) umbrella, to enable financial institutions to cut the time in passing on interest rate reductions to consumers and businesses. From its launch, the TFS was indemnified as part of the APF.

On 21 June 2018, the government published a new Memorandum of Understanding between HM Treasury and the Bank of England (BoE), which set out the financial relationship between the two institutions. This memorandum announced that during the current financial year (April 2018 to March 2019), the £127 billion liabilities of the Term Funding Scheme (PDF, 1.4MB) would be transferred from the APF to the Bank of England’s (BoE) own balance sheet and that the HM Treasury indemnity for it would be removed.

Further to this announcement, we can confirm that the TFS was transferred out of the APF to the balance sheet of BoE on 19 January 2019.

An indemnity extension has now come into effect from this date until the point when BoE receives a capital injection of £1.2 billion from HM Treasury (estimated to be late March 2019), after which BoE will bear any future risk from holding the TFS on its balance sheet.

This change has no impact on public sector net debt (both including and excluding public sector banks).

VAT changes to the supply of digital services

On 1 January 2015, VAT rules relating to the supply of telecommunications, radio and television broadcasting and electronically supplied services changed.

Prior to 1 January 2015, supplies made by EU businesses to EU resident customers were subject to VAT in the country where the suppliers were established; from 1 January 2015, the supplies are subject to VAT in the country where the customer is resident. The tax changes are as a result of European legislation.

This legislation provided for a transition period of four years during which the tax authority in the country where the supplier is located could retain a part of the VAT collected prior to passing on the remainder of the collected tax to the country where the customer is resident.

From 1 January 2019, all VAT collected for digital services are collected by the tax authority in the appropriate country. In the next publication (21 March 2019), we will be including these cash receipts for the first time, covering the period April 2018 to February 2019.