The United Kingdom's government has reported a significant increase in tax revenue, with households facing the prospect of additional financial measures as Prime Minister Andy Burnham outlines plans for increased public spending. Official figures from HMRC show a substantial rise in tax receipts for the period of April to June 2026.
During this quarter, Britons paid a total of £227.7 billion in taxes and National Insurance contributions, an increase of £16.6 billion compared to the same period the previous year. A significant portion of this revenue, £132.1 billion, was generated from income tax, capital gains tax (CGT), and National Insurance contributions, marking an £11.4 billion rise from the prior year. This growth is largely attributed to frozen income tax thresholds, which have moved more individuals into higher tax brackets even with modest pay increases. These thresholds are currently set to remain unchanged until at least 2030.
Prime Minister Burnham has indicated intentions to introduce new cost-of-living measures and potentially raise the personal allowance from its current level. However, his past support for a 50 pence tax rate on high earners could also contribute to increased government revenue. Capital gains taxes are also expected to be a focus, with Burnham previously advocating for wealth taxes. Proposals to align CGT rates with income tax bands have been a longstanding argument among campaigners. Following adjustments made in the 2024 Budget, basic rate taxpayers now face a 10% CGT rate on assets, while higher-rate taxpayers pay 24%, an increase from 20%.
In June alone, CGT receipts amounted to £192 million, a £27 million increase compared to the previous year. Experts suggest that discussions around potential changes to the taxation of assets upon death, as well as broader wealth and property taxation, could influence investor behavior, leading to either accelerated or delayed asset disposals and consequently affecting tax receipts.
Inheritance tax also saw a notable increase, bringing in £2.3 billion between April and June, a rise of £96 million in the first full quarter since changes to Agricultural Property Relief and Business Property Relief took effect. Further increases in inheritance tax revenue are anticipated as pension wealth is brought within its scope next April. Tax professionals have noted that while specific plans from Burnham and his Chancellor, John Healey, remain unclear, expectations of further tax rises may prompt a renewal of activity in placing assets into trusts ahead of the Autumn Budget.
Looking further ahead, rising asset prices combined with frozen thresholds are projected to sustain the growth in inheritance tax receipts. With trillions in assets expected to transfer between generations over the coming decades, this area is likely to remain a significant source of government revenue. Burnham has previously floated the idea of a new 'death tax' to fund adult social care, referencing a 2010 proposal for a national care service funded by a 10% tax on estates, which at the time was estimated to generate £3.6 billion.