Why your tax bill just rose £16.6 billion without a Budget
Key Points
- HMRC collected £227.7 billion between April and June 2026, £16.6 billion more than last year
- Income tax, CGT and NICs rose £11.4 billion, with PAYE receipts setting a record in April
- Frozen thresholds mean 40.8 million people will pay income tax by 2026/27, up from 33 million
- Higher-rate taxpayer numbers are on course to hit 7.7 million
- Business taxes rose 15% while tobacco and environmental taxes fell
HMRC collected £227.7 billion in tax between April and June 2026, £16.6 billion more than the same period last year, without any headline tax rise taking effect.
The revenue collector published the figures in its monthly receipts bulletin on Tuesday (21 July), with the data showing that frozen thresholds did most of the heavy lifting.
Income tax, capital gains tax and National Insurance contributions accounted for £11.4 billion of the increase, a 9% rise on last year. PAYE income tax and NICs alone brought in £132.3 billion, £11.5 billion more than the same quarter in 2025, and April PAYE receipts set a new record.
Fiscal drag does the work
Income tax thresholds have stayed frozen since 2021/22, so pay rises push workers into tax for the first time or into higher bands without any change to rates.
HMRC’s income tax liabilities statistics project that the number of people paying income tax will rise from 33 million when the freeze began to 40.8 million by 2026/27. The number of higher-rate taxpayers is expected to reach 7.7 million.
Quilter Tax and Financial Planning Expert Shaun Moore said the freeze has become central to government revenue.
“Fiscal drag has become one of the Treasury’s most effective revenue-raising tools,” he said. “Frozen thresholds continue to pull more people into paying tax and push others into higher tax bands, allowing billions to be raised without the need for a headline tax rise.”
“What began as a temporary measure has evolved into one of the Treasury’s most reliable sources of additional revenue. The longer frozen thresholds remain in place, the more dependent the public finances become on the receipts they generate.”
Where the money came from
Business taxes rose £3.1 billion, a 15% increase, driven by strong onshore corporation tax payments from industrial and commercial companies in June. VAT brought in £45.1 billion, up £1.2 billion, and stamp taxes rose 11% to £5.1 billion.
Inheritance tax receipts reached £2.3 billion for the quarter, with June setting a monthly record. Tobacco receipts fell £0.1 billion and environmental taxes dropped £71 million, an 8% decline.
| Tax | April to June 2026 | Change on last year | Notes |
|---|---|---|---|
| Income tax, CGT and NICs | £132.1 billion | Up £11.4 billion (9%) | April PAYE receipts a record |
| VAT | £45.1 billion | Up £1.2 billion | January 2026 receipts a record |
| Business taxes | £24.1 billion | Up £3.1 billion (15%) | Strong onshore corporation tax |
| Fuel duty | £6.4 billion | Up £0.4 billion | Longer-term decline as EV use grows |
| Stamp taxes | £5.1 billion | Up £0.5 billion (11%) | Follows April 2025 threshold changes |
| Alcohol duty | £2.9 billion | Up £22 million | June dip follows a strong May |
| Inheritance tax | £2.3 billion | Up £96 million | June is the highest month on record |
| Tobacco duty | £1.9 billion | Down £0.1 billion (6%) | Long-term downward trend |
| Air Passenger Duty | £1.1 billion | Up £51 million | Reflects continued travel growth |
| Environmental taxes | £0.8 billion | Down £71 million (8%) | Quarterly payment pattern |
