21 October 2025
If you are covering the latest HMRC tax receipts data, please see the following comment from Rachael Griffin, tax and financial planning expert at Quilter:
Today’s HMRC data show total tax receipts of £438.6bn in September, up £32.1bn on the same month last year. With the Budget now just weeks away, the figures offer a revealing snapshot of the public finances and how heavily the government continues to lean on fiscal drag to prop up revenues.
PAYE Income Tax and National Insurance contributions of £235.3 bn remain artificially inflated by the freeze to tax thresholds, which has steadily dragged more earners into higher tax bands as wages rise. This doesn’t point to a roaring economy but a sign of a Treasury increasingly reliant on extracting more from the same taxpayers. With fiscal drag proving such a dependable source of income, the Chancellor may now be tempted to delay any unfreezing of thresholds, despite the political awkwardness that would bring. Reversing the freeze was positioned as a signature move in her first Budget but maintaining it would quietly preserve billions in extra tax revenue.
Inheritance Tax receipts continue to climb, reaching £4.4bn, which is £0.1bn higher than the same period last year, as frozen thresholds and soaring asset values pull more families into scope. The direction of travel suggests this burden could grow further. There is speculation that the government is considering changes to the gifting rules, including the possible introduction of a lifetime cap on tax-free gifts, which would limit people’s ability to pass on wealth gradually over time. Combined with the planned inclusion of pensions within IHT from 2027, these measures risk transforming what was once a niche tax affecting a small minority into one that captures an increasingly large share of the population.
Capital Gains Tax receipts of £207m remain volatile, but there have been few rumours about CGT reform so far. With the annual exemption already slashed to a fraction of its previous level, any further tinkering would be highly punitive for those who fall within its scope. The concern for investors is that even modest adjustments to rates or allowances can have a disproportionate effect on behaviour, particularly for those relying on investment gains to supplement income.
Taken together, the latest data reveal a government still struggling to create genuine fiscal headroom. Rachel Reeves has so far stuck steadfastly to her manifesto pledge not to raise taxes for “working people,” but that may simply pave the way for a series of smaller, more technical changes to the tax landscape instead. These may avoid the political fallout of headline rate rises, but they risk adding yet more complexity to a tax system already riddled with thresholds and exemptions. For ordinary savers, navigating this landscape risks becoming harder by the year.
