HMRC’s latest tax receipts highlight a tax system that is increasingly being shaped by design choices rather than short-term fixes.
With the budget now behind us, it is clear that frozen thresholds are no longer a temporary measure but a central part of how revenues are being raised, says Shaun Moore, tax and financial planning expert at Quilter.
These figures will certainly bring some Christmas cheer to the Treasury even if it represents a nation paying ever more tax, he said.
PAYE Income Tax and National Insurance receipts for April to November totalled £309.6 billion, an increase of £32 billion on the same period last year. This reflects the ongoing interaction between nominal pay growth and static thresholds, which continues to pull more people into higher tax bands even where real incomes remain under pressure.
“While headline tax rates have been left unchanged, the share of income being taxed continues to rise. In the run-up to the Budget there was speculation that income tax rates might increase or thresholds could be lowered outright,” Moore said.
“Neither happened. Instead, the decision to extend the threshold freeze delivers a similar outcome over time, but in a way that is less visible and easier to sustain politically.”
Rather than relying on eye-catching tax rises, Moore notes that the Chancellor has opted for a series of incremental decisions layered onto a system that steadily increases the tax take by default.
“For working households, this means higher marginal rates are increasingly encountered earlier, even without a single moment that feels like a clear tax rise,” he said.
Inheritance tax and pensions
Inheritance tax receipts rose to £5.8 billion, up just £84 million on the same period last year, but continues a trend that is now firmly embedded. At the budget, there were no major additional changes to IHT but the continuation of frozen thresholds will drag more people into paying it, said Moore.
“With the nil-rate band still fixed at £325,000, rising property values and accumulated savings mean more estates are being drawn into IHT, often among families who would not traditionally consider themselves wealthy. What was once viewed as a tax affecting a small minority is steadily becoming a broader concern.
“That pressure is set to intensify further. From 2027, pensions are due to be brought into scope for inheritance tax, significantly expanding the tax base at the same time as thresholds remain unchanged. For many households, pensions now represent one of the largest components of wealth, meaning future liabilities could be far larger than people expect.”
Against this backdrop, discussions around lifetime gifting limits carry added significance perhaps even one to broach around the Christmas dinner table, Moore said.
He noted that any move in this direction would represent a meaningful shift in how wealth is passed between generations.
“While the detail of any future reform remains uncertain, the direction is clear: more estates, over a longer period, are likely to face inheritance tax.
“Taken together, the receipts figures point to a tax system that is widening its reach rather than raising its voice. For households, this makes forward planning less about reacting to big announcements and more about understanding how gradual policy choices affect them over time.”
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