July HMRC stats: Could Capital Gains Tax rise?

HMRC collected £97.9 billion in tax during July, up from £92.8 billion in July 2025. Despite this increase, public expenditure exceeded tax receipts during the month, resulting in a budget deficit of £1.8 billion.

For businesses, investors and individuals, the figures underline the likelihood that the Government will continue looking for ways to increase revenues – even where it remains committed to protecting the headline rates of income tax, VAT and National Insurance.

Tom Goddard, Assistant Manager, said:

HMRC’s latest tax statistics show that total tax receipts for July amounted to £97.9 billion, compared with £92.8 billion in July 2025. However, the government’s budget deficit reached £1.8 billion during the month as public expenditure exceeded tax receipts

Could Capital Gains Tax become a target?

One area that could come under renewed scrutiny is Capital Gains Tax (CGT).

Attention is now turning towards the Chancellor, John Healey’s, inaugural Budget, scheduled for 28th October. While the government has repeatedly committed not to increase the headline rates of income tax, VAT and national insurance contributions, significant fiscal pressures remain. The Chancellor therefore may seek to increase revenues through CGT in order to maintain commitments on the main taxes.

The current difference between income tax and CGT rates is likely to remain part of the debate. Basic-rate income tax is currently 20%, rising to 45% at the highest rate, while CGT rates are 18% and 24% respectively.

However, a direct increase in CGT rates is far from the only option available to the Government.

Fiscal drag could prove more important than headline rate rises

Historically however, governments seeking to increase tax revenues have often done so through adjustments to exemptions and fiscal drag, rather than increases to the headline rates of taxation. It is therefore likely we will see the same this October.

Fiscal drag is already contributing to rising tax revenues. When tax thresholds remain frozen while wages, property values and other assets increase, more people can gradually find themselves paying tax at higher rates or becoming liable for taxes they previously fell outside.

Fiscal drag is when tax bands are frozen, dragging people into paying a higher rate of tax as earnings increase with inflation. This tactic has contributed to the ever-increasing tax takes being seen month on month. HMRC’s July figures represent the highest monthly tax take on record outside of January, traditionally their strongest month due to the self-assessment payment deadline.

What the latest figures tell us about taxpayers

Tom concluded:

For taxpayers required to file a self-assessment tax return, January and July are the two most significant payment dates. While January includes any balancing payment for the previous tax year together with the first payment on account for the current year, July is when the second payment on account becomes due

Income tax receipts reached £40.8 billion in July, compared with £37.7 billion a year earlier. This could indicate that self-employed individuals and owner-managed businesses are continuing to make relatively strong profits, with fewer taxpayers reducing their payments on account.

Elsewhere, VAT receipts reached £20.2 billion, while Inheritance Tax generated £868 million. The continued strength of IHT receipts reflects the impact of frozen thresholds, rising asset values and more estates falling within the tax net.

What could this mean for businesses and individuals?

The key message is that tax rises do not necessarily need to arrive as an obvious increase in a headline tax rate.

Businesses and individuals should consider the wider tax environment – including frozen allowances, changing exemptions, thresholds and the interaction between different taxes. For investors and business owners, any CGT changes could also influence decisions around disposals, investment structures and succession planning.

While it is too early to predict what the October Budget will contain, the latest receipts suggest the Government has limited room to ignore the need for additional revenue.

What you should consider/do next

Review potential asset disposals: If you are considering selling investments, property or business interests, assess the potential CGT implications under current rules.

Review your tax position: Consider how frozen thresholds and allowances could affect your position over the coming years.

Business owners should plan ahead: Consider how potential tax changes could affect extraction, investment and succession decisions.

Avoid making decisions based solely on speculation: Budget announcements can change the tax landscape quickly, so professional advice should be sought before bringing forward transactions purely because of anticipated changes.

Watch the 28 October Budget: The Chancellor’s first Budget will provide the clearest indication of whether CGT and other taxes will be used to address the Government’s fiscal pressures.

Would you like to know more?

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