HMRC’s last tax statistics before the Spring Statement are looking optimistic for Rachel Reeves and the Treasury

Tom Goddard, a Senior Associate said:

The dust has now settled following a manic tax filing season, and HMRC’s last tax statistics before the Spring Statement are looking optimistic for Rachel Reeves and the Treasury.”

HMRC’s total receipts across the busy period of December to February were £11bn higher in 2024/25 than 2023/24. The increase is in part due to fiscal drag pushing ordinary workers into higher tax rates as a result of frozen tax bands.

Despite income tax being collected via self-assessment being £388 million lower in February 2025 than for the same month last year, total income tax receipts are actually up £1.65bn. This shows that as wages continue their upwards trend everyday workers are being subjected to higher tax rates on their employment income, leaving them with less disposable funds to enjoy the recent spell of good weather.

VAT receipts have gone up by ca. 15% over the last 2 years. Although the Chancellor might claim this is because of her decision to introduce VAT on private school fees, the increase in VAT tax revenues appears to be due to inflation driving up the underlying prices on many VATable products and services over the past 24 months. Corporation tax receipts are also continuing to increase and are now almost 9% higher than they were in the 12 months to February 2024.

The increase in tax takings may be a relief for Rachel Reeves, who does not want the upcoming Spring Statement to be a major fiscal event. While cost saving measures will likely be implemented, as the UK’s borrowing costs exceeded forecasts by £20bn in February 2025, hopefully these extra revenues mean that she can ‘stay calm and carry on’ from a tax policy perspective.

Tom added:

However, although the increase in tax receipts will cover some of the UK’s borrowing costs, it is still possible there will be covert measures in the Spring Statement to increase the Government’s future tax takings by tinkering with tax thresholds and reliefs.

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