UK tax receipts reach £322.7bn as unexpected £1.8bn July borrowing jump stokes Autumn Budget pressure
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Chancellor of the Exchequer John Healey
HM Revenue and Customs has collected £322.7 billion in total from National Insurance contributions and tax between April and July 2026, compared with the same period last year.
The tax increase was driven by personal and corporate taxation receipts marking a £19.1bn increase on the same four-month period last year, even as government borrowing unexpectedly jumped to £1.8bn ahead of the upcoming Autumn Budget. Total public sector borrowing reached £56.7bn in this financial year to July 2026.
Self-employed income tax receipts were £17.1 billion in July, up almost 11% from July 2025. Takings from inheritance tax receipts continued to rise, reaching £3.2bn between April and July: an increase of £0.1bn year-on-year aided by frozen thresholds, rising asset values and a record monthly intake in June 2026.
Inheritance tax receipts stood at £868m for July 2026, up from £844m in July 2025, though slightly down from £871m in June 2026. This marked a fifth consecutive increase in four-month receipts, following a full-year record reaching £8.5bn in 2025/26.
Early signs showed capital gains tax receipts could be on track to set another record this tax year, despite higher income tax and National Insurance receipts making up the majority of the increase.
Data showed that receipts reached £194m in July 2026, an increase from £165m in July 2025. Receipts for capital gains tax in the past reached £22.2bn in 2025/26, beating the previous record set in 2022/23 at £16.9bn and £13.7bn in 2024/25.
In the 2024 Autumn Budget, then-Chancellor Rachel Reeves announced an increase of the lower rate from 10% to 18% and the higher rate was increased from 20% to 24%.
Overall gains from income tax, capital gains tax and National Insurance contributions combined generated £189.8bn (up £13.2bn year-on-year for the four-month period), while business taxes raised £31.6bn (up £3.7bn) and VAT generated £64.8bn (up £1.0bn).
Wealth experts have warned that approaching reforms to legislation will soon pull more client wealth into the Treasury’s net.
Danni Hewson, AJ Bell head of financial analysis, said: “If the new chancellor needed any reminder of the tight rope he will have to walk when he steps up to the dispatch box at the end of October, today’s borrowing figures delivered that in spades.
“Despite self-assessment tax receipts hitting a record high for the month, borrowing shot up by a surprising 68.7% in July, compared to the same month last year, as the government continued to spend more than it brings in.
“July is often the month when the government books a tidy surplus and that’s what economists and the OBR had expected. Despite the increased take from VAT, Corporation Tax, NI contributions and Income Tax, pressures including increased benefit spend and debt interest costs gobbled away all the extra cash and a bit more.
“The 0.2% jump in RPI between April and May added £1.3 billion to the interest payable in July and current turmoil in global bond markets will make for uncomfortable reading at the Treasury.
“High demand means investors can demand more for their investment and that’s keeping long term government borrowing costs elevated both in the UK and globally.
“For John Healey it means he’s going to have to work on some fancy footwork if he’s going to deliver the kind of feel-good budget the country is clamouring for if it’s going to invest and grow.
“And that means months of speculation which in previous years have resulted in businesses and households simply pressing pause on their spending plans as they wait to see how bad things might get.
“The new PM has been enjoying his honeymoon period, with the good weather contributing to a boost in consumer confidence, but the realities of rising inflation could quickly undermine that confidence especially once the heating needs to be turned on.”
Nick Henshaw, head of intermediaries distribution at Wesleyan, said: “Under current plans, pension assets won’t benefit from the same reliefs available to other estate assets, potentially adding another layer of complexity for families and those administering estates.
“There is also the risk of pension pots being discovered after an estate has been settled. In those circumstances, the Inheritance Tax position across the estate may need to be revisited, potentially leaving beneficiaries facing an unexpected bill years after an inheritance has been distributed.
“For advisers, this reinforces the importance of helping clients to get their affairs in order well ahead of April 2027. Keeping an up-to-date record of all pension arrangements and regularly reviewing estate plans can make it easier for families to understand what they are dealing with and reduce the risk of unwelcome surprises down the line.”
Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, said: “The scope of IHT will increase dramatically from next April, when unspent pension assets become part of savers’ estates, not least as bullish equity markets have boosted pension pots in recent years.
“That will mean more families will become subject to IHT and estates that are already facing an IHT bill could be looking at an even greater one. The beneficiaries of those older than 75 are at risk of a super-sized tax burden from next April as they could also pay Income Tax at their marginal rate when they withdraw funds from the pension, after it’s already been depleted by IHT. That could mean they end up with not much more than a third of the value of the pension left by the saver.”
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