Government tax take soars and households face another likely raid as Burnham plots spending spree

The Government continues to rake in record tax receipts with households offered little respite as the new Prime Minister opens the door to a swathe of expensive new policies.

Andy Burnham has pledged new cost-of-living measures, alongside raising the personal allowance and more spending on social care and defence. 

He will need to find a way to fund these policies and keep within the fiscal rules, which is likely to lead to more tax rises. 

Economist Paul Johnson said Burnham would either not be able to deliver or ‘we’re in for big tax hikes’. 

The increasing likelihood of tax increases will add to the growing burden on households as fresh figures published by HMRC show that the Government continues to bring in more from frozen tax thresholds.

Britons paid a staggering £227.7billion in overall tax and National Insurance contributions between April and June 2026, which is £16.6billion higher than the same period last year.

The lion’s share of this came from higher income tax, capital gains tax (CGT) and NICs which raised £132.1billion in the period, up £11.4billion from the same period last year.

It is a direct consequence of frozen income tax thresholds which have dragged more workers into higher tax brackets even if their pay only rises with inflation. With thresholds frozen until at least 2030, the figures are set to climb even further.

While Burnham has indicated plans to increase the personal allowance from its 2021 level of £12,570, he has also previously backed a 50p tax rate for Britain’s highest earners, which would continue to rake in billions more for the Government.

Capital gains taxes are also likely to come into sharp focus again, with Burnham a strong advocate of wealth taxes.

Campaigners have long argued for CGT rates, applied to investment and property profits, to be aligned with income tax bands.

It follows Rachel Reeves’ increase to rates in the 2024 Budget, from 10 to 18 per cent for basic rate taxpayers. Higher-rate taxpayers now pay 24 per cent, up from 20 per cent previously.

HMRC figures show CGT receipts alone accounted for £192million of the tax take in June alone, £27million higher than the same month last year.

Shaun Moore, tax and financial planning expert at Quilter said: ‘Recent speculation has included possible changes to the treatment of assets on death alongside wider discussions around property and wealth taxation. 

‘Whether any of these proposals ultimately materialise remains uncertain, but the debate itself can influence behaviour. Investors may accelerate or delay disposals depending on how they perceive the direction of travel, making receipts more volatile and harder to predict.’

Inheritance tax figures also saw a £96million increase to £2.3billion between April and June, the first full quarter since changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) came into effect.

Even more families will be dragged into paying IHT once pension wealth is brought into its scope next April, pushing receipts higher.

Laura Hayward, tax partner at professional services group S&W, said: ‘We’ve yet to see what Andy Burnham and his new Chancellor, John Healey, plan. 

‘There’s little clarity so far, but expectations of more tax rises may mean the rush of activity seen to put assets in trust ahead of April renews after the summer in the run-up to the Autumn Budget.’

She added: ‘The longer term is more certain, however. Rising asset prices and frozen limits will continue to see IHT receipts grow. 

‘And with trillions in assets still to pass from Baby Boomers to Generation X and Millennials over the next couple of decades, there’ll be plenty of activity to come.’

Burnham has signalled he is ready to introduce a new ‘death tax’ to fund adult social care. 

He told reporters he had worked out a plan ’15 years ago’, referencing his 2010 plan to create a £3.6billion national care service, funded by a 10 per cent tax on estates.

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