Ashes to ashes: Tax receipts are up but Wednesday’s Budget will be Rachel Reeves’ trial by fire
Tax receipts are up, but the chancellor, Rachel Reeves still has to survive the heat of next week’s Budget, say leading audit, tax and business advisory firm, Blick Rothenberg.
Tom Goddard, a senior associate at the firm, said: “HMRC’s latest statistics show tax receipts are still growing above inflation. Excitement over the Ashes, which started today also continues to grow, and Rachel Reeves will be hoping her own ‘Test Match’ this week does not crumble in the same manner.”
He added: “The Budget has been beset with rumours of what she has been planning. This has included a U turn on a U turn (on a manifesto pledge) and everything from income tax rises, to threshold changes, to changing gifting rules and even taxing milkshakes. However, we do know that total HMRC receipts are nearing the coveted £900bn mark for a 12-month period, in fact they are £896.7bn for the period between November 2024 to October 2025. The 12 months prior were £842.3bn and before that, £816.4bn.”
Tom said: “Income tax has risen 10% in the previous 12 months, with similar levels of growth seen for National Insurance Contributions (NIC) of 8%. No doubt aided by the shadowy presence of fiscal drag continued by this Government from the prior incumbents and now speculated to continue on further with the personal allowance looking as frozen in the headlights as some of the batters at the crease today.”
He added: “The upward trend in receipts for two of the primary sources of revenue for the Government will be welcome news for the chancellor, as borrowing figures for the 7-month period this fiscal year reached £116.8bn. The combined taking of these two taxes for the most recent 7-month period was £290bn.”
Tom said: “Value Added Tax (VAT) is also showing an upward trend, although less dramatic, with an increase in revenue of 4% for the last 12 months meaning takings of £176.2bn for the period November 2024 to October 2025 benefiting from inflationary rises.”
He added: “For the chancellor tax should not be the primary concern of this Budget. Revenues from all major tax streams are consistently rising and will continue to do so. Instead, she should focus on addressing the UK’s weak growth forecasts which showed only a 0.1% GDP growth figure in Q3 2025 on Q2 2025. The way to stimulate growth may not be through higher taxes.”
Tom said: “If the UK economy experiences some real growth, tax takings and revenue for the government will naturally rise as a result of this. As to the question of how to encourage growth, encourage investment through tax policies that reward success and don’t punish it should be at the top of the batting order.”