Two sides of the tax story – National Insurance up, Capital Gains Tax down
The latest tax data for the first months of the 2025/26 tax year shows mixed trends.
Employers’ National Insurance contributions (NICs) are sharply up, rising by nearly £2 billion in a single month, while Capital Gains Tax (CGT) receipts have fallen compared to the previous year.
Property taxes and Inheritance Tax (IHT) also show notable changes.
These movements raise important questions for both business owners and individual taxpayers. Here is what is happening, and what to consider now.
Employers face rising costs
In May 2025, employers paid £10.66 billion in NICs, nearly £2 billion more than in the same month last year.
This increase follows the 1.2 per cent rise in Employers’ NICs and a reduction in the threshold from April.
For many businesses, higher NICs add to an already challenging environment of rising costs.
The impact will not be felt evenly. Some sectors such as retail, hospitality and care, where employment costs form a larger share of overheads, will feel this more acutely.
For business owners, reviewing employment costs and forecasting how these will develop over the rest of the year is a priority.
Reliefs such as the Employment Allowance may help, but a more detailed understanding of your cost base is key.
Capital Gains Tax receipts fall
CGT receipts have declined in recent months, with £12.19 billion collected between November 2024 and May 2025, down from £13.7 billion the previous year.
A weaker M&A market is a major factor, as is the impact of last autumn’s Budget changes. Timing is also important, as CGT is often paid months after transactions complete.
There is still a possibility that CGT receipts could rise later this year, as disposals brought forward ahead of the last Budget come through.
However, there is also speculation that the Chancellor may look again at CGT rates or allowances in the next Budget.
Investors and property owners should consider whether now is the time to review their CGT position and broader tax planning.
Property and Inheritance Tax pressures
Stamp Duty receipts fell in May, down 30 per cent on earlier peaks, following the end of the temporary SDLT relief.
Inheritance Tax (IHT) remains steady, £1.5 billion paid in the first two months of this tax year but continues to rise in overall terms.
More estates are being caught by frozen thresholds and rising property values.
Planning ahead
These tax figures highlight how quickly things can change, sometimes in opposite directions.
For employers, understanding and managing rising NICs is now critical.
For asset owners and investors, a fresh look at CGT and IHT exposure may be wise ahead of the next Budget.
If you would like to discuss how any of these changes could affect you or your business, we are here to help. Contact us today.
