Chancellor Rachel Reeves's stealth tax raid on Britons continues to "drag many more people" into paying more to HM Revenue and Customs (HMRC), new data has revealed.
The tax authority has published the receipts for levies, including inheritance tax (IHT), capital gains tax (CGT) and stamp duty, during April and May.
IHT receipts reached £1.5billion for April and May 2025, marking a £98million increase compared to the same period last year, according to the latest HMRC data.
The surge in receipts was attributed to several larger transactions than usual in April, but experts warn that frozen tax thresholds continue to pull more families into paying the levy.
Rachel Reeves is being urged to "rethink" her decision to keep tax allowance thresholds frozen
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"Inheritance tax continues to soar into the new tax year, with receipts up £98million on where they were at the same point last year. We could well be on course for another record-breaking year," said Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.
The finance expert highlighted that fiscal drag remains a significant factor as frozen thresholds mean more estates exceed the tax-free allowance.
This occurs when tax allowances remain at the same level over a period of time when incomes or inflation are on the rise, resulting in taxpayers being pulled into higher brackets.
Morrissey warned that families face an additional challenge from 2027 when pensions are expected to lose their inheritance tax exemption.
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The standard inheritance tax rate is 40 per cent above the £325,000 threshold, which many Britons are being pulled into paying
GETTY"It's a move that will drag many more people into the net and is making them rethink their plans," she said.
The change could prompt those with pension access to gift funds to relatives now rather than leaving them as inheritance. Large gifts exit an estate for inheritance tax purposes after seven years, potentially encouraging earlier transfers.
"However, it's really important to think this through carefully before you do so. You don't know how long you are going to live and giving away too much, too soon, could spell disaster for your own later life planning," Morrissey cautioned.
She advised seeking financial guidance to navigate tax mitigation without compromising retirement security. Income tax collections fell to £21.2billion in May, down 29 per cent from April's figure, though still representing a six per cent increase from May 2024.
Sarah Coles, head of personal finance at Hargreaves Lansdown, explained that the May decline was expected following April's typical start-of-year bump.
"It's still up six per cent from May 2024, thanks to the horrors of fiscal drag pushing more people over tax thresholds, and hiking tax bills for millions of people," Coles said.
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Fiscal drag is dragging Britons into higher tax brackets GETTY The threshold freeze remains in place until 2028, promising continued pressure on taxpayers. Coles suggested using cash ISAs to shelter savings interest and contributing to pensions through salary sacrifice as effective strategies.
She noted that Governments find threshold freezes appealing as they technically avoid breaking manifesto promises whilst proving highly profitable for the Treasury.
CGT collections jumped 21 per cent in May and 44 per cent year-on-year to £232million, suggesting investors have finally started realising gains despite reduced allowances and higher rates.
"It appears that some of those who were putting off making a gain, after the allowances fell and the rate on stocks and shares rose, have finally bitten the bullet," Coles observed.
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