The Budget isn’t even here yet and the tax take is rocketing (Image: Getty)

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.

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.

We Are Being Hit With a Sneaky £30bn Tax Grab – BEFORE Burnham’s Budget

British taxpayers are facing a growing financial squeeze even before Chancellor John Healey delivers his highly anticipated Budget, with new figures revealing that tax and National Insurance receipts have climbed by almost £30 billion in six months.

The figures have reignited the debate over the real cost of Britain’s tax policies, with critics warning that households are paying more without necessarily seeing higher headline tax rates announced by the government. The controversy centres on frozen tax thresholds, rising wages and prices, and previous tax changes that are continuing to feed through into government revenue.

But there is an important distinction: the £30 billion figure does not represent a single new tax imposed by Prime Minister Andy Burnham. It is the year-on-year increase in receipts collected by HM Revenue and Customs between April and September 2026. The increase reflects several factors, including existing tax policies and changes in the economy. <Cite refs={[“turn302189search3″,”turn302189search5”]}/>

With the Budget scheduled for October 28, the figures have intensified scrutiny of the government’s plans and raised questions about whether households and businesses can afford further increases.

The £29.5bn Increase Behind the Headlines

HMRC figures reported ahead of the Budget put total tax and National Insurance receipts at £467.3 billion between April and September 2026, approximately £29.5 billion higher than during the same six months a year earlier.

The reported increase includes £17.8 billion more from income tax, capital gains tax and National Insurance, £3.8 billion more from VAT, and £6.4 billion more from business taxes. <Cite refs={[“turn302189search3″,”turn302189search5”]}/>

These are increases in the amount collected, not proof that the government has introduced new taxes worth £29.5 billion during that period. Higher earnings can increase income tax receipts, rising prices can raise VAT payments, and changes in business profits can affect corporation tax revenue.

Nevertheless, the figures illustrate the scale of the financial burden facing taxpayers. When the government collects more money, the important questions are where that increase comes from, who bears the cost and whether public services are improving sufficiently to justify the additional revenue.

Those questions are especially pressing when households are still dealing with the cost of housing, food, energy and transport.

The Quiet Effect of Frozen Tax Thresholds

One of the most significant factors is a policy known as fiscal drag.

The personal allowance—the amount most people can earn before paying income tax—has remained at £12,570 since April 2021. The government has extended the freeze on income tax thresholds until April 2031. <Cite refs={[“turn302189search0″,”turn302189search1”]}/>

When wages rise but tax thresholds remain unchanged, more people can become liable for income tax. People who already pay tax may also find that a greater proportion of their income falls into higher tax bands.

For example, imagine a worker earning just below a tax threshold who receives a pay rise. If the threshold remains frozen, some of that additional income may become taxable. The worker has not necessarily faced an increase in the headline tax rate, but their tax bill can still rise.

The same process can affect people who receive regular pay increases to keep pace with inflation. Their income may rise in cash terms without providing the same improvement in purchasing power after tax and higher living costs.

The House of Commons Library explains that frozen thresholds increase tax revenue because more income becomes taxable without the government formally raising the relevant rates. <Cite refs={[“turn302189search0”]}/>

Critics often describe this as a stealth tax because its effects can build gradually rather than arriving through one highly publicised Budget announcement.

Millions Could Pay More Without a Rate Increase

The Office for Budget Responsibility has estimated that the continued freeze on income tax and National Insurance thresholds will bring millions more people into income tax or move existing taxpayers into higher tax bands by 2030–31.

Its November 2025 analysis estimated that, compared with a system in which the relevant thresholds rose in line with inflation, the freezes would result in around 5.2 million additional people paying income tax, 4.8 million more paying the higher rate and 600,000 more paying the additional rate by 2030–31. <Cite refs={[“turn302189search1”]}/>

These are projections over several years, not figures for people newly taxed during the six-month period covered by the latest receipts.

The distinction matters because the overall rise in tax receipts and the long-term effect of frozen thresholds measure different things. The first describes how much more the Treasury collected compared with a year earlier. The second estimates how the tax system changes over time because thresholds remain fixed.

Even so, both figures highlight why the Budget debate extends beyond the question of whether ministers will announce a rise in headline tax rates.

Pensioners Face a Growing Tax Dilemma

Pensioners are also caught up in the debate because the state pension continues to rise while the standard personal allowance remains frozen.

The full new state pension is expected to rise to approximately £13,036 a year from April 2027, exceeding the £12,570 personal allowance. Without a special arrangement, pensioners whose only income is the full new state pension could technically become liable for income tax. <Cite refs={[“turn302189search6″,”turn302189news11”]}/>

The government is expected to announce a higher tax-free allowance for eligible low-income pensioners in the Budget, intended to prevent people who rely solely on the state pension from paying income tax on it.

However, the proposed protection is not expected to apply universally to all pensioners. People with workplace pensions, private pensions or other taxable income could continue to face tax under the standard rules, depending on the final arrangements. <Cite refs={[“turn302189news11″,”turn302189news13”]}/>

That raises difficult questions about fairness. Some retirees may have modest additional pensions precisely because they saved during their working lives. They will want to know whether those savings could leave them with a different tax outcome from someone whose income comes entirely from the state pension.

The Budget should clarify the eligibility criteria and explain how the proposed exemption will operate.

Previous Tax Changes Are Still Feeding Through

The increase in receipts also comes after earlier Budgets introduced measures affecting employers, businesses, investments and inherited wealth.

Some changes do not affect the Treasury’s accounts immediately. They may be phased in over several years or begin to influence receipts only once taxpayers and businesses adjust their behaviour.

The government has also extended the freeze on income tax thresholds, originally introduced by the previous Conservative administration, until April 2031. That means the present rise in receipts cannot be attributed solely to decisions made by Burnham’s government in recent months. <Cite refs={[“turn302189search0″,”turn302189search3”]}/>

The distinction does not remove the government’s responsibility for its current tax policy. It does, however, make it important to separate inherited measures, subsequent policy changes and the natural effects of higher incomes and prices.

Tax receipts can rise even when the government introduces no new tax during a particular month. Equally, an increase in receipts does not automatically mean that every taxpayer is worse off by the same amount.

Understanding who pays more—and why—is essential to evaluating the real effect of the government’s decisions.

Why the Budget Could Bring More Uncertainty

Healey faces pressure to balance the public finances while funding public services and other government priorities.

The House of Commons Library has highlighted the government’s fiscal rules and the uncertainty surrounding borrowing costs, economic growth and tax revenue ahead of the Budget. The Chancellor must decide whether existing policies provide enough room to meet those rules or whether further tax or spending measures are needed. <Cite refs={[“turn302189search2”]}/>

EY’s October analysis estimated that the government’s fiscal headroom had narrowed to approximately £11.3 billion, down from £23.6 billion in March. That estimate illustrates the limited margin available if economic conditions deteriorate or borrowing costs rise further. <Cite refs={[“turn302189search4”]}/>

The government has pledged not to increase the main rates of income tax, employee National Insurance or VAT. However, those commitments do not rule out every possible change to tax thresholds, reliefs, tax bases or smaller levies.

Ahead of the Budget, reports have discussed potential changes involving banks, online marketplaces, property and other areas. These remain proposals or speculation unless confirmed in the Chancellor’s statement. <Cite refs={[“turn302189search2″,”turn302189search7”]}/>

For households, the uncertainty matters because a change in a tax threshold or relief can affect take-home income even when the headline rates remain untouched.

What Should Taxpayers Watch For?

The most important details in the Budget will be the measures that affect actual household finances rather than the political language used to announce them.

Taxpayers should look for clarification on whether income tax thresholds will change, whether existing freezes will remain in place, how pensioners will be protected and whether new levies will affect savings, property or business income.

Workers should also remember that an increase in gross pay does not necessarily translate into an equivalent increase in take-home pay. The outcome depends on income tax, National Insurance, pension contributions and other individual circumstances.

Pensioners, meanwhile, should wait for the final eligibility rules before assuming they qualify for the proposed higher allowance.

Businesses will be looking for clarity on any changes to employer costs, tax reliefs and reporting obligations. Unexpected changes can affect investment decisions and recruitment, particularly for smaller firms operating with tight margins.

The government should publish clear explanations of who will pay more, how much revenue each measure is expected to raise and how the money will be used.

The Real Test for Burnham and Healey

The latest figures provide a clear reason for public scrutiny, but they need to be understood in context. The £29.5 billion increase in receipts is not a single tax grab announced by Burnham, and it does not mean that every household has paid an additional amount of that scale.

What it does show is that the Treasury is collecting substantially more tax than it did during the same period last year. Frozen thresholds are an important part of the wider story, alongside earnings, prices, business activity and earlier policy decisions.

As the Budget approaches, the government faces a difficult challenge: demonstrating that it can manage public finances without placing an excessive burden on households and employers.

For taxpayers, the crucial question is whether rising receipts will be accompanied by better services, greater economic security and a clearer long-term plan—or whether more of their income will be absorbed by a tax system whose thresholds fail to keep pace with changing circumstances.

Healey’s Budget on October 28 should provide further answers. Until the measures are confirmed, however, taxpayers should distinguish between established policy, projected revenue increases and speculation about new taxes.

The debate is about more than one headline figure. It is about transparency, the distribution of the tax burden and whether the government can explain convincingly how its decisions will affect ordinary people.

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