Is the Chancellor Rachel Reeves Being Led by the Stats?

The headline figures look encouraging – but beneath the surface, they raise important questions about fiscal policy, economic behaviour, and what could come next for taxpayers.

A Strong Month for Receipts on Paper

HMRC’s September 2025 figures show total receipts of £71.2bn, with the 12-month total up 6% year-on-year.

Tom Goddard, Senior Associate said:

Looking at the major tax streams for the government (Income tax, NIC and VAT), it would be positive viewing for the Chancellor, with all showing increases.

Income tax remains the government’s biggest revenue source, accounting for 31% of all receipts and rising 9.8% over the year. Corporation tax also saw a modest gain, up £300m on September 2024 as Q3 filings came in.

These are, on the face of it, positive trends for a Treasury under pressure. But they come against a backdrop of higher borrowing costs – £7.2bn above forecasts according to the ONS and total borrowing just shy of £100bn for the six months to September. Rising receipts may offer short-term reassurance, but they also mask deeper structural pressures on the public finances.

Property Taxes in the Spotlight

The most striking figure is in Stamp Duty Land Tax (SDLT). Receipts surged 24.2% year-on-year, to £14.9bn, making it the fastest-growing tax stream. This spike appears linked to a rush of property transactions in March 2025, following announcements that SDLT bands were being adjusted.

With the sharp increase in revenue generated by SDLT, is the Chancellor perhaps viewing this tax as a serious revenue generator for the government and indeed ripe for reform as the Chancellor herself has historically called for?

This data point will feed speculation that further changes to property taxation could feature in the Autumn Budget. For businesses and individuals, especially in real estate and construction, the direction of SDLT policy could significantly influence investment and housing market activity over the coming year.

A Softening in Inheritance Tax

While most tax categories rose, Inheritance Tax (IHT) is moving in the opposite direction. Receipts were £65m lower in September 2025 than a year earlier – the second consecutive monthly decline.

Tom notes:

As a former economist, the Chancellor will therefore be looking at the downward trend of this tax and assessing options to get this back on track.

This fall could reflect slower estate settlements, changes in asset values, or behavioural responses to speculation about IHT reform. Either way, it gives the Chancellor both a challenge and an opportunity: to balance political messaging about fairness in taxation with the fiscal reality of reduced inflows.

Reading Between the Lines: What the Figures Really Mean

Taken together, the data presents a mixed picture. Revenues are broadly up but so are borrowing costs. The rise in property-related tax intake may not be sustainable, especially if it was driven by one-off behaviour ahead of policy changes. Meanwhile, the decline in IHT could signal early shifts in wealth transfer behaviour – a topic that often proves politically sensitive.

For businesses, this reinforces the importance of fiscal predictability. The Chancellor’s response to these figures will shape not only the Autumn Budget, but also investor confidence in the government’s ability to balance revenue-raising with growth-supportive policy.

What You Should Consider or Do Next

For businesses:

Plan for volatility – short-term revenue gains may not signal longer-term stability in tax policy.

Monitor potential reforms – particularly around property and wealth taxes, which could impact transaction timing and investment structures.

Model cashflow scenarios – factor in potential tax rate adjustments or relief changes in the upcoming Budget.

For individuals:

Stay informed on IHT developments – downward trends may trigger reform debates or thresholds adjustments.

Consider timing of property transactions – as SDLT changes could influence costs or incentives.

Seek advice early – tax planning remains essential as fiscal policy shifts to close the budget gap.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact.