Inheritance tax receipts reached a new record high of just under £8.5bn, up 2.6% on the year and more than double the £3.5bn collected two decades ago. Much of that growth can be attributed to the decision to freeze the nil rate bands, which has allowed rising house prices and investment values to drag more estates into the tax net each year. The pain is set to intensify as the inclusion of pensions in taxable estates from April 2027 is expected to pull 10,500 additional estates into inheritance tax that year alone, hike bills for a further 38,500 estates, and add an average of £34,000 to each of those charges.

Income tax receipts climbed from £302.8 billion to £330 billion, a 9% annual rise, but the more telling figure is the 49.6% increase since thresholds were frozen in April 2021.

Sarah Coles, head of personal finance at AJ Bell, describes it as “an incredibly effective stealth tax, dipping into our pockets for billions of pounds more in tax every year without the government ever having to announce a rise in the tax rate”.

With the freeze now locked in until at least 2031, there is little relief in prospect. The consequences extend beyond earnings, as crossing a threshold also raises the rate applied to savings and investment returns, and reduces the savings allowance, meaning taxpayers are surrendering an ever-greater share of their financial lives to HMRC.

Capital gains tax, meanwhile, has surged by almost two thirds, up 62% in a single year to £22.2bn, reversing two years of decline. That earlier fall reflected investors choosing not to realise gains after the annual allowance was slashed and rates on stocks and shares were increased. The subsequent rebound suggests that many, particularly larger investors, have eventually accepted the bill they had been deferring. Others continue to manage their exposure by realising gains gradually or holding assets until death to sidestep the tax entirely.

With dividend tax also rising this month, Ms Coles argues there has rarely been a more pressing time for individuals to review their tax position. Pension contributions remain one of the most powerful tools available, attracting relief at the highest marginal rate and reducing exposure to income tax. Salary sacrifice arrangements offer additional National Insurance savings, though these are set to become less generous from 2029. For savings and investments, the ISA wrapper, whether cash or stocks and shares, shields returns from income tax, dividend tax and capital gains tax alike, and those with holdings outside an ISA can use a Bed and ISA transfer to move up to £20,000 into the shelter in the current tax year.

Using the £3,000 annual capital gains tax allowance each year, transferring assets between spouses or civil partners, and making use of inheritance tax gifting allowances, including regular gifts from surplus income, which leave the estate immediately, can all help reduce long-term liabilities. Larger gifts fall outside the estate after seven years, though Ms Coles cautions against giving away too much too soon at the risk of leaving oneself short in later life.