HMRC collected nearly £1 trillion in tax – Where does this leave UK businesses?

Tax bills are the necessary cost of doing business in the UK and they have resulted in a record windfall for HMRC.

In the 2025/2026 tax year, a staggering £938.8 billion of tax revenue was collected.

This tax year will likely see over £1 trillion of tax collected and businesses need to think about the impact rising costs will have on their finances.

Is the tax bill for businesses too high?

The single largest contributor to the tax bill is tax collected from income, which encompasses Income Tax and employer and employee National Insurance Contributions (NICs).

Over half of all tax collected, £552.8 billion, is from income.

While business owners can be strategic about offsetting their own Income Tax, there is little to be done about the extent of employer NICs they need to contribute.

Even the treasury failed to account for the impact of employer NICs, as the predicted £24 billion addition to tax bills was eclipsed by the real addition of £28 billion.

It may feel frustrating for business owners who warned of the impact of employer NICs, but little seems likely to change to lessen the struggles faced by businesses.

The second largest source of tax revenue remains VAT, which in the most recent tax year generated £180.7 billion, while other business taxes, including Corporation Tax, reached a total of £101.4 billion.

Capital Gains Tax saw a sharp increase of 62 per cent, with the total amount raised reaching £22.18 billion compared to the £13.68 billion generated the year before.

Frozen thresholds and reduced reliefs can make businesses feel the strain of tax bills more than previously.

What should businesses do about rising tax bills?

For those who enjoy being a part of history, the 2026/2027 tax year is likely to be the first in UK history where £1 trillion of tax is collected.

Given its place as the biggest tax generator, income will contribute even more to the total tax collected as the recent increase to the National Living Wage (NLW) and the National Minimum Wage (NMW) will see higher NICs.

In fact, the new NLW will see an average full-time worker be exposed to Income Tax on half of their annual salary for the first time.

Business owners are likely to feel more of a sting as the increase in dividend tax rates will chip away at their tax efficiency and the reduction in Business Asset Disposal Relief will add to CGT burdens.

There were concerns that the current economic strategy was going to make things challenging for businesses and the recent outbreak of conflict in the Middle East has added to this.

The two most recent Autumn Budgets were criticised for overlooking SMEs, with little Government support in alleviating the effects of rising costs.

With little expected to change anytime soon, businesses should seek professional accounting support to manage the impact of rising costs.

Our team can help you consider your financial approach and help you to budget for the increased economic pressures you are likely to face.

Tax advice is vital in ensuring you are being tax efficient while still complying with all necessary obligations.

We can hope that the Government invests the sheer volume of tax collected into measures that will help businesses, including revitalising local economies, to help businesses that are dependent on footfall.

Whatever happens with the tax collected, we can help you to focus on the finances that are in your control.

To become more confident in managing your financial obligations, speak to our team.