Taxpayers are bracing themselves for yet another Labour tax raid in next week’s Budget. But latest figures show the Treasury is already collecting billions more.
The Budget isn’t even here yet and the tax take is rocketing (Image: Getty)
Taxpayers are being silently ripped off, and many don’t even realise it. HMRC’s latest figures, published yesterday, show total tax and National Insurance (NI) receipts hit a record £467.3billion between April and September. That’s £29.5billion more than in the same six months last year. That doesn’t mean Andy Burnham has personally imposed a £30billion tax hike. But it does show the scale of the rising burden tripping up taxpayers on his watch, even before Chancellor John Healey announces still more taxes in next week’s Budget.
The increase includes £17.8billion more from income tax, capital gains tax and NI, £3.8billion extra in VAT and £6.4billion more from business taxes. Some of this increase reflects rising wages, prices and business profits, rather than new tax rates. But taxpayers are still handing over more, as frozen tax thresholds help the Treasury take an ever bigger slice of our earnings. Over the full 2026/27 tax year, the total additional take is heading for a staggering £60billion. In just one year. Even in the unlikely event that Healey does nothing on October 28.
Former Labour chancellor Rachel Reeves raised taxes by an estimated £40billion in her first Budget and £26billion in her second, targeting employers’ NI, farmers and small businesses, but also our pensions, savings, capital gains, investments and inheritances. Those changes have only just started feeding into receipts, and their impact will grow because some of her levies haven’t even come into force yet.
Labour’s manifesto promised not to increase the headline rates of income tax, NI and VAT. Yet Reeves still hiked employers’ NI and extended the income tax threshold freeze, originally introduced by the Conservatives, through to 2031.
As wages rise but tax thresholds don’t, more people are dragged into paying income tax while existing taxpayers are pushed into higher bands, through a sneaky sleight of hand known as fiscal drag. Rachael Griffin, tax and financial planning expert at Quilter, said: “This happens without any change to the headline rates of income tax and shows just how effective fiscal drag has become as a revenue raiser for the Treasury.”
Pensioners are paying the price, too. A record 9.6million now pay income tax, and their numbers will climb again next April, when the new state pension rises above the £12,570 personal allowance.
Despite all this extra money, the government still borrowed a staggering £21.2billion borrowed in September alone while the national debt hit £3trillion for the first time ever. We could end up borrowing another £150billion over the year, yet Labour refuses to cut spending. Burnham talks endlessly about the cost-of-living crisis while ignoring how taxes are making people poorer, too.
Worse, several of Reeves’s changes have yet to come into force, including plans to bring unused pension funds into the inheritance tax net next April. Her 2% surcharge on savings interest and rental income are also due next April. The mansion tax and per-per-mile have still to take effect. Reeves’s pensions salary-sacrifice raid starts in 2029.
Tory or Labour, governments have become adept at raising taxes without the chancellor of the day announcing anything, thanks to fiscal drag. To take just one example, the £325,000 inheritance tax nil-rate band hasn’t increased since 2009. NFU Mutual says it would now be £532,500 if it had kept pace with inflation. The £3,000 annual IHT gifting allowance has been frozen since 1981. What a total con. They’re taking us all for mugs.
Healey may yet announce more tax increases next Wednesday. But even if he doesn’t, the tax burden is already rocketing and we’re all poorer as a result. Remember that when the Budget arrives. You’ll be paying more, whatever the Chancellor says or does.