Growing income tax receipts show impact of frozen thresholds
HMRC's latest tax receipts figures show income tax revenues continue to climb, fresh evidence of the growing impact of frozen tax thresholds, says the Association of Taxation Technicians (ATT).
Data released on Friday (August 21) shows that between April and July 2026, HMRC collected £117.6 billion in income tax, up from £109.8 billion during the same period in 2025. PAYE income tax receipts rose from £97.0 billion to £103.8 billion over the same four-month period.
The personal allowance, the amount you can receive before starting to pay income tax, has remained fixed at £12,570 since April 2021, while the higher-rate threshold has been frozen at £50,270. At last year's Budget, the Government announced that the freeze would continue until April 2031.
The ATT says the latest receipts figures demonstrate how frozen thresholds can steadily increase tax revenues without any change to headline tax rates.
Emma Rawson, Director of Public Policy at the ATT, said:
"The latest figures provide a clear illustration of how frozen tax thresholds affect taxpayers in the real world.
"Between April and July this year, HMRC collected almost £8 billion more in income tax than during the same period last year, despite no material increases in tax rates. While there are a range of factors behind rising tax receipts, continuing freezes to the main income tax thresholds are undoubtedly playing a significant role.
"Freezing allowances and thresholds is an effective way of increasing tax revenues without the negative publicity that often accompanies rises in headline tax rates. As earnings increase over time, more people are brought into paying tax, and more taxpayers are pushed into higher tax bands.
"The personal allowance and higher-rate threshold have now remained unchanged since 2021 and are due to stay frozen until 2031. That's a decade with no increase whatsoever, despite significant changes in earnings and prices over that period."
A forecast by the Office of Budget Responsibility accompanying last year's Budget estimated that extending the freeze for a further three years would raise approximately £22 billion in additional tax revenue by 2030-31.
Emma Rawson added:
"There have been persistent rumours that the Government could revisit the threshold freeze, but any meaningful change would come at a substantial cost to the Exchequer and would likely require either tax rises or spending reductions elsewhere.
"At the same time, the longer thresholds remain frozen, the more expensive it becomes to reverse the policy. Each passing year brings more taxpayers into the system and increases the gap between current thresholds and where they might otherwise have been."
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