HMRC Reports £24 Billion Increase in Tax Receipts, Boosting Government Finances

HM Revenue & Customs (HMRC) has reported a significant rise in tax receipts, marking a positive development for the government following recent budget criticisms. According to leading audit and business advisory firm Blick Rothenberg, total tax receipts have increased by £24 billion over the past year compared to the previous 12-month period.

Tom Goddard, Senior Associate at Blick Rothenberg, noted that the growth in tax receipts has been consistent, despite a slight dip in August where receipts were almost £1 billion lower than in August 2023. He stated, “Total tax receipts continue to grow year on year, with an increase of £24 billion over the last 12 months. This offers some much-needed financial optimism for the government after a challenging budget that left many concerned about the economy.”

The latest figures show that total tax collected in the past year has now surpassed £842 billion and is on track to reach the £850 billion mark by December, traditionally a strong month for revenue collection.

Income tax has been a major contributor to the increase, with an approximate 8% year-on-year rise in receipts. This growth outpaces the current Consumer Price Inflation (CPI) rate of 2.3%, which itself rose by 0.6% in the past month. Goddard explained, “The rise in wages, particularly for the UK’s lowest earners, is continuing to drive higher tax receipts. Labour’s commitment to maintaining the national living wage and freezing income tax thresholds and personal allowances until 2028/29 will bring even more people into higher tax bands.”

Goddard further highlighted the potential future impact of these policies. “Labour’s stance on income tax thresholds and National Insurance contributions will not affect the tax take until after April 2025, but the groundwork is already being laid for a sustained increase in tax revenue in the coming years.”

On the topic of inheritance tax, which has also drawn attention in recent discussions, Goddard pointed out that it contributes a relatively modest portion to HMRC’s overall receipts. Over the last year, inheritance tax accounted for just under £8 billion, or approximately 0.9% of total receipts. He added that any changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) will not impact revenues until April 2026, and the effects of inheritance tax changes may not be seen until November 2026.

The boost in tax receipts comes at a crucial time, providing the government with some financial breathing room amidst ongoing economic challenges.