UK tax receipts have reached £860.7 billion for the 2025/26 tax year to date, up from £788.1bn over the same period last year. Despite this sharp increase, Government borrowing is rising again as public spending continues to grow.
Much of the higher tax take reflects frozen thresholds and sustained tax increases, pulling more individuals and businesses into higher liabilities. PAYE taxpayers and the self-employed are both feeling the impact, while businesses face mounting costs across multiple tax areas.
Income tax receipts rose to £23.8bn in February, an 8% increase year on year, largely driven by fiscal drag. Capital gains tax (CGT) saw a notable spike, up 73% to £19.7bn, although it remains uncertain whether this level of growth will continue. VAT receipts also climbed, reaching £170.6bn so far this year, up around 5%, reflecting persistent inflation and high food prices.
Business taxation remains a key pressure point. Total business-related tax receipts stand at £97.5bn, with employer national insurance contributions rising sharply to £12.5bn in February, compared to £9.8bn a year earlier.
Inheritance tax continues to generate significant revenue, with £7.7bn collected so far this year. Monthly figures remain steady, but totals are on track to approach last year’s record.
Looking ahead, external pressures, including geopolitical tensions in the Middle East, could influence fiscal decisions such as planned fuel duty changes. At the same time, proposed pension tax reforms may further complicate long-term financial planning.
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