Go back to insightsWhat makes up the tax mix?
New HMRC data highlights the extent to which government revenue depends on just four key taxes.
Source: HMRC
In its 2024 general election manifesto, the Labour Party made firm commitments regarding four key taxes:
- “Labour will not increase taxes on working people, which is why we will not raise National Insurance, or the basic, higher, or additional rates of Income Tax, nor VAT.”
- “Labour will cap corporation tax at 25%, maintaining it at the lowest level in the G7 for the duration of the parliament.”
At the time, these pledges were viewed as politically important in addressing concerns that a Keir Starmer-led government would pursue a tax-and-spend approach. However, many economists criticised this so-called “quadruple tax lock”, arguing that it would significantly restrict the Chancellor’s flexibility over the next five years, particularly in an uncertain economic climate.
Two years on, those concerns appear justified. HMRC data released in April shows that in the most recent tax year, income tax, National Insurance (NI), VAT and corporation tax accounted for 86% of total tax receipts. This is consistent with longer-term trends, with these four taxes generating more than £4 out of every £5 collected over the past decade.
Despite the manifesto commitments, income tax receipts rose by 9% in 2025/26 compared to the previous year, outpacing both inflation and overall economic growth. This increase is largely due to the continued freeze on personal allowances and tax thresholds, which has drawn more individuals into taxation and pushed others into higher tax bands.
National Insurance receipts increased even more sharply, rising by 16.3%, driven in part by changes to employer contribution rates, measures that appear to challenge the spirit of the original pledge. Combined, income tax and NI, both taxes on earnings, accounted for 56.5% of total HMRC revenues.
By contrast, VAT revenue grew by a more modest 5.7%, while corporation tax rose by just 4.6%. The slower growth in corporation tax may reflect increased claims for tax relief by employers in response to higher NI costs.
The heavy reliance on these four key taxes helps explain why the Chancellor has introduced a range of smaller adjustments across the tax system to generate additional revenue. It seems increasingly likely that further measures of this kind will feature in the next Budget.
Important information
Tax treatment depends on individual circumstances and may change in the future.
The Financial Conduct Authority does not regulate tax advice.
3rd July 2026