HMRC tax receipts hit record highs as frozen thresholds pull millions into higher tax bands

Inheritance tax receipts reached a record £2.3billion in June as experts warned fiscal drag is increasing tax bills

HM Revenue and Customs (HMRC) has collected record levels of tax as frozen thresholds continue to push millions of people into higher tax bands.

Inheritance tax receipts reached a record £2.3billion in June 2026, £96million higher than during the same month a year earlier.

Income tax, capital gains tax and National Insurance contributions also generated significantly more revenue for the Treasury.

Combined receipts from the three taxes totalled £132.1billion during the first quarter of the 2026/27 tax year.

That was £11.4billion more than during the same period a year earlier.

Financial experts at Forvis Mazars said the continued increase in tax receipts reflected the impact of fiscal drag, with frozen tax thresholds capturing more people as wages and asset values rise.

Tom Trewby, director of private client tax at Forvis Mazars, said: "The upward trajectory of tax receipts continues for HMRC as fiscal drag pulls more people over the frozen thresholds."

He added: "It's a tax rise by stealth: rising asset prices mean that inheritance tax is hitting families it never used to catch, while the number of higher-rate UK income taxpayers is expected to rise to 7.7 million in the current tax year - nearly two million higher than in 2023-24."

Mr Trewby said the number of people paying the additional rate of income tax on earnings above £125,140 is expected to increase to 1.29 million during the current tax year.

He also warned further changes to inheritance tax are due to come into effect from April 2027.

From that date, unused pension wealth will be brought within the scope of inheritance tax.

Mr Trewby said: "The IHT landscape will shift from April 2027 as pensions fall into scope. This won't only mean higher IHT tax bills, but headaches for executors who will have an additional legislative burden."

He added: "The most important step families can take now is to seek advice. Doing this early is the best way to navigate through these changes, and make the most of the reliefs and exemptions available."

Prime Minister Andy Burnham has indicated he is aware of concerns surrounding frozen income tax thresholds.

Speaking to The Times, he said the "frustration" over the five-year freeze on the £12,570 personal allowance had "lodged in my mind" while campaigning in the Makerfield by-election.

However, no changes to income tax thresholds have been announced.

The current freeze on the personal allowance, which was extended by former chancellor Rachel Reeves, is due to remain in place until 2031.

The latest figures indicate the Treasury continues to benefit from higher tax receipts as frozen thresholds and rising incomes bring more people into higher rates of tax.