The amount of tax collected by HMRC for 2025/26 increased by 9.3% compared to the previous year. The figure is unsurprising given the hike in capital gains tax (CGT) rates, as well as employer national insurance contributions (NICs).
Receipts for CGT
CGT receipts for 2025/26 were an astonishing 62% higher than for 2024/25:
CGT is sometimes described as an ‘optional tax’, as it can be avoided by postponing disposals. There is also no CGT charge on death, and future governments may choose to reduce CGT rates.

• However, those who did sell assets faced a hike in rates from 10% and 20% to 18% and 24%. Many landlords will have sold up in advance of the Renters’ Rights Act 2025 coming into force, while business owners could have benefited from a tax rate saving of 4% by selling prior to 6 April 2026.

 
There is little to be done during one’s lifetime to escape CGT on buy-to-let properties, but those with a substantial investment portfolio might want to postpone disposals to later in life, if they are planning to retire abroad. With careful planning – professional advice being essential here – CGT can be mitigated; the tax saved might mean a better standard of living in retirement is affordable.
 
Employer NICs
 
The receipts from Class 1 employer NICs have gone up to nearly £144 billion, an increase of over £35 billion.
 
There is limited scope for most employers to avoid the increases, which came in from April 2025, although an unincorporated business might consider taking on senior staff as partners, though probably as limited partners to prevent any personal liability should the business fail.
 
Be warned that there has been some speculation regarding the introduction of some type of employer NICs on partnership profits.
 
Receipts on income tax
Income tax receipts have risen less sharply, although frozen thresholds and allowances are inexorably taking their toll, dragging more and more taxpayers into higher tax bands. Some higher earners may contemplate relocating to a more tax-friendly jurisdiction, which, if the overseas stay is long enough, could avoid CGT on the disposal of investments.
Details of HMRC tax receipts and NICs can be found at HMRC official statistics.

The normal expenditure out of income exemption allows individuals to make gifts during their lifetime that are immediately exempt from inheritance tax (IHT) – there is no seven-year wait. A recent case heard by the First-tier Tribunal (FTT) has cast some light on what is meant by ‘normal expenditure’.
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Exemption
To be covered by the exemption, gifts must:

• be made as part of the individual’s normal expenditure;
• be made out of income; and
• leave the individual with sufficient income to maintain their usual standard of living.

 
The income aspect might be considered straightforward, but this is not always the case. There is no statutory definition, and income is not necessarily the same as income for tax purposes. It will, for example, include non-taxable income, such as income from individual savings accounts (ISAs). HMRC considers income to become capital after it has been accumulated for a period of two years.
 
‘Usual standard of living’ will generally be what was usual for the individual at the time the gift was made. Exemption may, therefore, not be lost where an individual makes a regular commitment, at a time when surplus income was available, but then has to lower their standard of living for another reason, such as redundancy.
 
Normal expenditure
 
The case heard by the FTT was only concerned with whether the gifts made by the taxpayer were normal expenditure. To count as normal, gifts must be habitual or regular, but do not have to be a fixed amount.
 
Although the taxpayer had made many substantial charitable donations, HMRC took issue with donations to campaigns supporting the UK leaving the EU. Exemption for these donations was denied because they were made over a period of just nine months, which was not sufficient time to establish a settled pattern; there was no predictability to the donations. What is more, there was no particular reason for the financial amount given to each gift.
 
A settled pattern would normally mean gifts being made over three to four years, but a single gift might qualify if there is evidence that it was intended to be the first in a pattern.
 
Detailed guidance on the normal expenditure out of income exemption is available in HMRC’s internal manuals: IHTM14231 to IHTM14255.