HM Revenue & Customs is braced for a substantial surge in tax receipts this January as millions of taxpayers settle their self-assessment bills and employers begin paying out annual bonuses, according to tax advisers.
The boost, described as a “January tax boom”, is being driven by the fast-approaching self-assessment deadline on 31 January, alongside a broader year-on-year rise in overall tax revenues.
Robert Salter, a director at Blick Rothenberg, said there would be “no January blues” for the tax authority this year.
“Millions of taxpayers will need to pay their 2024–25 tax liabilities before the end-of-January deadline, significantly boosting January’s receipts,” he said. “This comes against the backdrop of a steady rise in the overall tax take year on year.”
Latest figures from HM Revenue & Customs show total tax revenues for the 12 months to December 2025 rose by more than 7 per cent compared with the previous year — an increase of over £60 billion.
Salter said the momentum is unlikely to fade quickly. “Employers typically pay taxable bonuses over the next two to three months, meaning HMRC can expect several more months of strong receipts as we approach the end of the tax year on 5 April 2026,” he said.
However, advisers cautioned that the surge in revenue is being driven less by underlying economic growth and more by recent tax policy changes. Salter pointed to direct tax rises introduced by the chancellor, Rachel Reeves, including the increase in employers’ national insurance contributions to 15 per cent.
He also highlighted the growing impact of fiscal drag — where frozen tax bands and thresholds pull more workers into higher tax brackets as wages rise with inflation.
“More and more taxpayers are paying higher rates of tax not because they are genuinely better off, but because thresholds remain frozen while wages increase,” Salter said.
As a result, he said, annual government tax receipts could soon exceed £1 trillion for the first time. Receipts for the year to December 2025 were around £910 billion and are expected to rise sharply over the final months of the tax year.
Despite the short-term boost to the public finances, Salter warned that higher inflation and rising joblessness, which he said were at least partly linked to higher employer taxes — could undermine the government’s longer-term economic ambitions.
“The risk is that these tax rises weaken employment and growth, leaving the Treasury under continued pressure from both a taxing and spending perspective,” he said.
While January’s figures are set to provide a welcome lift for HMRC, economists and advisers say the challenge for ministers will be turning today’s tax windfall into sustainable, long-term economic growth rather than relying on ever-higher receipts driven by fiscal drag and rising tax burdens.
