HM Revenue and Customs (HMRC) is “drawing millions into paying more tax” under a stealth raid, experts warn.
The latest figures show the tax authority raked in £322.7billion in tax and National Insurance contributions during the opening four months of the 2026/27 fiscal year, surpassing the equivalent period last year by £19.1billion.
The lion’s share of that increase came from income tax, capital gains tax and National Insurance contributions, which together delivered an additional £13.2billion, a rise of seven per cent in percentage terms.
Business taxes contributed a further £3.7billion uplift, representing a 13 per cent jump, while VAT added £1billion to the coffers. Stamp taxes also climbed by eight per cent over the same stretch.
‘Stealth tax’ warning as millions could be hit with a bill worth thousands | GETTY
The only category to register a decline was environmental taxes, which fell by £100million; representing a drop of around seven per cent.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, pointed to fiscal drag as the driving force behind the ballooning tax haul.
She said: “The tax take continues to soar as fiscal drag draws more people into paying more tax and at higher rates.
“Getting that pay rise, bonus or promotion is a source for celebration but could also tip you into a higher tax band; this not only leaves you paying tax at a higher rate but it can also mean you lose valuable tax-free allowances and hike up the tax rate you face on savings interest or capital gains.”
How much more will you pay by 2031 due to fiscal drag? | STANDARD LIFE
Fiscal drag commonly occurs when tax allowances are frozen while wages or inflation rise, resulting in people being dragged into higher HMRC tax brackets.
Ms Morrisey added: “You may also find you stand to lose valuable benefits such as tax-free childcare or become subject to the high-income child benefit tax.”
However, the financial analyst noted that there are steps taxpayers can take to blunt the impact of frozen thresholds.
Ms Morrisey shared: “Making the most of your ISA allowances can shelter your money from savings interest, capital gains and dividend tax.
Tax receipts, including income tax, CGT and National Insurance, over recent years | HMRC
“Meanwhile, pension contributions can play a role in keeping your income below tax thresholds which can allow you to keep key benefits as well as paying less tax.
“The clock continues to tick down to unused defined contribution pensions being part of your estate for inheritance tax purposes.
“It’s a change that will boost the receipts of a tax that has already surged in recent years.”
Those affected by the inheritance tax changes are likely to explore gifting as a means of shrinking their estates, Ms Morrissey explained.
“Some will start making gifts now in a bid to reduce the value of their estate. There are various allowances that can be used whereby the money leaves your estate for inheritance tax purposes immediately.”