You might feel as though your business’s tax bill has become increasingly more substantial of late.
HMRC’s record amount of tax collected in the 2025/2026 tax year, an incredible £938.8 billion, shows that this feeling is valid.
As the collected revenue is projected to cross the £1 trillion threshold in this tax year, it is time for businesses to take a serious review of their finances and how such steep taxation is going to impact them.
The full picture of tax collection is complicated and has managed to defy even the predictions of the Treasury.
Businesses have expressed that employer National Insurance Contributions (NICs) have placed a strain on operations and this view may have been vindicated with the official figures.
Instead of the anticipated £24 billion addition to tax bills, the revisions to NICs resulted in a £28 billion addition instead.
NICs, both employer and employee, coupled with Income Tax, make this the largest source of revenue for HMRC – securing £552.8 billion in 2025/2026.
VAT once more demonstrates its importance as it is the second largest source of revenue for HMRC, generating £180.7 billion for the Treasury, while other business taxes, including Corporation Tax, reached £101.4 billion.
One of the largest increases in tax revenue came from the 62 per cent spike in Capital Gains Tax (CGT), which saw HMRC collect £22.18 billion compared to £13.68 billion the previous year.
All of these taxes can create an intimidating tapestry that can leave business owners feeling trapped in their obligations.
There is a distinct possibility that the record tax collected in 2025/2026 will be eclipsed by a tax bill in 2026/2027 that may be more than £1 trillion.
A fresh increase in wages will once more drive up the amount of Income Tax and NICs collected, even if rising unemployment blunts the edge of this somewhat.
The new National Living Wage (NLW) is high enough that an average full-time worker will see over half of their annual salary exposed to Income Tax for the first time.
A less generous Business Asset Disposal Relief may see another CGT spike, while a slight increase in dividend tax rates reduces their tax-efficiency slightly.
Businesses were already concerned that rising costs were putting undue pressure on their ability to operate and the outbreak of conflict in the Middle East has increased the challenges.
Much of the current approach from the Government was designed and implemented in better economic conditions, with little done to adjust for the more difficult present reality.
This means that businesses should be seeking accounting advice from trusted experts to ensure that they are in a better position to face the coming months with confidence.
While the previous two Autumn Budgets have been seen to overlook the needs of SMEs, our team understand the needs and challenges of the businesses that form the backbone of the UK economy.
Having experts review your current approach can ensure that you are operating with the financial confidence you need to succeed.
We can also determine whether you are operating in a tax-efficient way while still complying with all necessary regulations.
There may be a positive side to the large pot of tax collected, as if the Government can use it to revitalise local economies, then this could benefit businesses that are more reliant on footfall.
Whatever the Government does with the tax it collects, we can help you to stay dynamic with your finances.
Get in touch for expert support in managing your rising business costs.
