Employer national insurance raises £2.1bn extra in single month

More than £2bn was raised from employer’s national insurance in April alone even before the full impact of rises are felt, while inheritance tax was up 14% in a single month

The highest tax bills for decades are being seen across the board as frozen thresholds and rising costs put both individual and business taxpayers under increasing pressure. But surprisingly, HMRC is reaping less revenue from penalties, which fell to £830m in the 12 months, May 2024-April 2025, compared to the previous year’s total of £1.14bn.

The latest HMRC stats for tax revenue show that employer NICs brought in £12.66bn for the month, the highest figure ever, up from £10.52bn in March 2025. This was an additional £909m compared to a year earlier, putting the government on track to raise up to £24bn from the huge tax hike for businesses.

What was slightly alarming was that HMRC said these figures ‘largely related to March liabilities’ by employers, so do not reflect the full impact of damaging April hike in PAYE NIC1 bill for businesses. It will be another month until the impact of that take hike is fully reflected in the monthly data.

The overall tax take continues to rise, with figures for April 2025 hitting £80.2bn, up £4.3bn on the same period last year.

Despite the previous chancellor’s 4% cut in employee NICs, which was expected to cost around £12bn a year, this has not been the outcome. In fact, in April 2025, the monthly figure was £17.55bn, up £370m from £17.18bn in April 2024.

Frozen thresholds are once again hurting taxpayers with a £2.5bn extra tax burden in April 2025, as income tax take hit £29.82bn, up from £27.41bn year on year.

The standout figure was inheritance tax, up an eye watering 14% in a single month to £780m, marking one of the biggest hauls yet.

Albeit IHT is affected by the size and value of estates liable for the tax at a particular point, with HMRC noting monthly variations ‘can be partially attributed to a small number of higher-value payments than usual.’ Regardless, IHT take in the last 12 months has hit a record £8.34bn, up from £7.58bn year on year and it is on a steadily rising trajectory as more people are dragged into the tax.

Nicholas Hyett, investment manager at Wealth Club said: ‘Over the last 20 years the inheritance tax tab has increased from £3.3bn to £8.2bn. With such a strong start to the 2025-26 tax year this is only going one way - and that is up. This is no accident – leaked government documents made it clear this week that inheritance tax is still seen as a cash cow by some members of the cabinet.

The government’s raids on historically IHT free investments and assets – like pensions, private company shares and AIM shares – create exactly the kind of uncertainty that puts people off making investments. The attack on the AIM market has been particularly egregious where uncertainty is concerned.’

Inheritance tax is going to become even more of an earner when the government’s new rules on charging IHT on pension pots comes into effect in 2027 with continuing upward swing.

Laura Hayward, tax partner at S&W said: ‘With the nil rate band set to remain frozen until at least 2030 and already announced reforms due to affect how inheritance tax is charged, we can expect to see this trend continuing.

‘We are currently having lots of conversations with clients who want to know what they can do to mitigate against the inheritance tax changes.

‘Speculation is growing that the chancellor will need to raise taxes at the autumn Budget to meet spending commitments and this could lead to further changes being made to the charging of inheritance tax.’

Stamp taxes, including stamp duty land tax and share taxes, was up by a third, driven by a surge in property sales to avoid the end of the SDLT post covid reduced rates. SDLT alone raised £1.30bn, down slightly on the previous month’s £1.40bn. Latest figures show house prices are going up by over 6% a year so property tax is bound to continue an upward trajectory.

Rising prices are also helping the government with VAT rising again to a monthly figure of £18.3bn, up from £17.6bn a year ago. Coupled with the 3.5% inflation rate this is unlikely to fall back anytime soon. Historically this is a high VAT take for April and is up nearly £2bn on same period in 2023.

Fuel duty was also strong in April, hitting £2.0bn, which was £74m higher than last year’s £1.92bn, but down slightly on March figures. This was against a background of fast falling petrol and diesel prices which helps drivers but raises questions about how this tax will be replaced as EV targets are ever achieved. It also points to an area where the chancellor could look to raise taxes at the Budget by releasing the long-frozen fuel duty escalator.

Sheena McGuinness, co-head of energy and natural resources at RSM UK, said: ‘Whilst the tax take for the majority of other taxes has increased, fuel duty receipts continue to fall. This decline is even more stark when tax revenues on average are increasing steadily, with the 2023-24 tax year seeing an annual uptick of 5.3%.

‘But, aside from shrinking fuel duty revenue, the energy sector is facing continued investment uncertainty amidst shrinking profitability in renewables. It casts doubt over the government’s ability to meet its net zero growth ambitions.’

Meantime the government’s spending deficit shot up to £20.2bn, up from £16.4bn the previous month, and uncomfortably high, leading to calls for the chancellor to change her self-imposed fiscal rules.

‘Low growth results in lower tax revenues and lower government income, making it almost impossible for the chancellor to balance public spending and revenue without growth-inhibiting tax raids,’ said Professor Joe Nellis, economic adviser to MHA.

‘Of the government’s two economic goals - cutting the deficit and creating a growing economy - they must prioritise growth.

‘The Chancellor should scrap her fiscal rules to enable public and corporate investment and focus on recalibrating the economy onto a positive path to growth.’

Source - Business & Accountancy Daily

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