Government figures show that income tax and National Insurance receipts for April were £47.9bn, nearly £3bn higher than the same time last year. However, Government borrowing figures also rose, with the difference between spending and tax income up £1bn since the same time last year, and the fourth-highest figure since monthly records began in 1993.
Economists said this gives Chancellor Rachel Reeves less wriggle room and she will have to raise taxes again.
They include Ruth Gregory, deputy chief UK economist at Capital Economics, who said the “poor start” to the financial year had resulted in tax rises “starting to feel inevitable”.
Danni Hewson, head of financial analysis at DIY investment site AJ Bell, said: “It’s not the start to the year the Chancellor would have wished for.
“Despite the impact of her Budget changes to employers’ National Insurance kicking in and boosting Treasury coffers by almost £2bn, April’s numbers suggest there is still much more to do.”
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Tax rises to come
Hewson said the Chancellor must feel “like a tightrope walker” as she tries to keep to fiscal rules and not raise taxes.
Shaun Moore, tax and financial planning expert at wealth manager Quilter, said the recent leaked Labour proposals suggest that the “Treasury’s appetite for revenue may not yet be satisfied”.
The memo, reportedly from deputy Prime Minister Angela Rayner, included eight potential revenue-raising measures including reinstating the pensions lifetime allowance, scaling back dividend tax reliefs, and a higher corporation tax rate for banks.
“Combined with speculation that the additional rate income tax threshold could remain frozen beyond 2028, it is clear the UK’s tax landscape is evolving quickly and may become more punitive,” Moore added.
Any tax rises are expected to be announced in the Autumn Budget.
Moore said increased tax receipts and the prospect of further changes highlight the need for sensible tax planning.
“HMRC’s latest figures mark the start of a new tax year, but the story remains much the same. The Government’s stealth tax strategy is still quietly drawing in ever-growing sums.
“For households feeling the squeeze, the compounding effect of frozen thresholds and shrinking reliefs makes careful tax and financial planning more important than ever,” he said.
