Why Your Tax Bill Just Went Through the Roof

Brace yourselves — HMRC has been raking in record-breaking amounts of tax, and if you’re feeling the squeeze, you’re not alone. Between April 2024 and January 2025, an eye-watering £23 billion more was collected compared to the previous year. Self Assessment tax alone shot up 19% — a staggering £10 billion higher than before the pandemic.

January, the busiest month for tax collection, saw Self Assessment receipts soar to £25.88 billion, a sharp rise from £21.7 billion in 2024. This is a stark reminder that UK taxpayers are shouldering the heaviest tax burden in decades.

So, what’s driving this relentless tax rise? A combination of factors:

• Frozen Tax Thresholds: With personal allowances stuck in place, more people are being dragged into higher tax brackets due to wage growth.

• PAYE Increases: In January alone, PAYE tax receipts jumped by £5 billion compared to two years ago, hitting £23.3 billion.

• Corporation Tax Hikes: The rise in the main corporate tax rate to 25% means businesses are coughing up more.

• Inheritance Tax Boom: Already up 11% year-on-year, IHT has added £6.9 billion to government coffers — and we’re not even at the end of the tax year.

Despite these colossal figures, the numbers still fell short of government forecasts. The Office for Budget Responsibility (OBR) predicted Self Assessment receipts of £28.9 billion in January, meaning late filers could still tip the scales.

Why Is This Happening?

With the Spring Statement looming, businesses and taxpayers alike are anxiously waiting to see if Chancellor Rachel Reeves will deliver any relief. But early indicators suggest that major tax cuts are unlikely, and some are even bracing for further increases.

While employee National Insurance was trimmed from 12% to 10%, many taxpayers are seeing little benefit as rising wages push them into higher tax brackets. And with government spending under pressure — particularly in defence and public services — the likelihood of tax breaks seems slim.

What's Next?

With the tax burden at its highest in decades, it’s more important than ever to take control of your tax affairs. Whether you’re navigating Self Assessment, looking for legitimate tax-saving strategies, or need help planning for the future, The Tax Faculty is here to guide you. Don’t wait until the last minute — stay ahead of the game and make sure you’re not paying more than you need to.

Need expert advice? Get in touch with The Tax Faculty today and take charge of your tax bill before HMRC takes charge of it for you.

What Can You Do About It?

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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