In just one-month businesses have paid out nearly £2bn in extra employers’ National Insurance while capital gains tax take fluctuates by the month as hit by weak M&A market.
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The total tax take from April to May 2025 rose to £142.8bn, £8.6bn higher than the same period in 2024, mainly influenced by income tax, National Insurance and VAT receipts which soared by £6.1bn.
In May 2024 HMRC took £84bn in income tax, capital gains tax (CGT) and national insurance contributions (NICs), rising from £77.9bn in May 2024, with one third of the increase (£2bn) coming from the rise in employers’ NICs.
Employers paid a total of £8.73bn in NICs in May 2024, fast forward to this May, one month after the 1.2% increase and the reduction in the employment threshold from 6 April, and the figure is up by £1.92bn to £10.66bn.
If this trend continues through the rest of this tax year, then Rachel Reeves’ £22bn black hole will be filled and the Treasury’s projected £24bn from the NICs hike will have produced the results they wanted, but the likeliness of this happening is not certain as already companies are looking to cut jobs to reduce their employment costs.
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Rachel Griffin, tax and financial planning expert at Quilter, said: ‘These changes represent a clear shift in the burden towards businesses. While the policy may help shore up the public finances, it could also influence hiring decisions and wage growth in the months ahead.’
CGT was also notably up at £232m compared to same time last year, when only £161m was paid. There was even a large increase from April when £191m was paid.
Changes were made to the lower and higher rates of CGT at the Budget last autumn with immediate effect but this has not had the impact chancellor Rachel Reeves would have been hoping for. Between November 2023 and May 2024, £13.7bn was paid in CGT, while the same period from November 2024 this has reduced by more than £1.5bn to £12.19bn.
