Taxpayers hand over £8bn more as Reeves's raids kick in
Taxpayers have forked out an extra £8.6bn in just two months as Rachel Reeves' Budget starts to bite, new figures show.
Data from HM Revenue and Customs (HMRC) shows that tax receipts hit £142.8bn for April and May, a rise of more than 6pc compared to the same period last year.
Almost £3 in every additional £4 raised came from income tax and National Insurance, alongside increased revenue from capital gains and inheritance tax.
Tax expert Rachel Griffin called the increase 'another chapter in the Government's stealth tax strategy', while retirement specialist Stephen Lowe said Labour's 'tax train showed absolutely no signs of running out of steam'.
In her maiden Budget in October, the Chancellor raised employers' National Insurance contributions from 13.8pc to 15pc and reduced the salary at which they become due from £9,100 to £5,000. She also retained the Conservatives' plans to freeze income tax thresholds.
The moves came despite Labour's manifesto promise not to raise taxes on working people.
As a result of the changes, HMRC received an extra £6.1bn in revenue for the two measures over April and May compared to last year, with £3.6bn in additional income tax and another £2.5bn in National Insurance contributions.
Ms Griffin, of Quilter, said: 'HMRC's latest figures for May 2025 mark another chapter in the Government's stealth-tax strategy. Despite no new headline tax rises, receipts continue to climb thanks to frozen thresholds and slashed allowances.
'With income tax thresholds still frozen, many workers are paying a larger share of their earnings in tax simply due to modest pay rises, even when those increases fail to match inflation.
'This month's figures also capture the first full month's impact of the April changes to employer National Insurance contributions. While the policy may help shore up the public finances, it could also influence hiring decisions and wage growth in the months ahead.'
There was also a £97m increase in inheritance tax receipts. The amount is expected to increase quickly next year after the Chancellor's decision to halve agricultural and business property relief after the first £1m of assets.
From April 2027, pensions will also be considered for inheritance tax.
Mr Lowe, of Just Group, said: 'The Treasury's inheritance tax revenues continue to surge with this tax train showing absolutely no signs of running out of steam through the first couple of months in this financial year.
'The reforms announced at the autumn Budget, which included further extending the threshold freeze and tightening the exemptions for pension wealth, will likely tip more estates into paying the tax and further boost the Chancellor's coffers.'
There was also an increase of £106m in capital gains receipts, which have continued to rise following changes implemented in October last year. The Chancellor increased the lower rate from 10pc to 18pc and the higher rate from 20pc to 24pc for shares and other non-property assets.
Richard Bate, of law firm Weightmans, said: 'With inheritance tax thresholds frozen and key reliefs due to be curtailed from 2026, families and business owners are acting early – restructuring their estates while current capital gains tax rates and allowances remain in place.
'But in doing so, many are facing an unwelcome double tax hit – capital gains tax now, followed by potential inheritance tax later if planning isn't carefully managed.'
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