UK Tax Revenue Statistics 2026 — £1.1 Trillion Collected by HMRC

HMRC collected approximately £1.1 trillion in tax in 2024/25, equivalent to around 35% of GDP. The UK tax burden is at its highest level since the 1940s as a share of GDP, reflecting rising income tax thresholds being frozen while wages grow.

Income tax is the largest single revenue source at £268 billion. The personal allowance is £12,570 and the higher rate threshold is £50,270. Freezing these thresholds since 2021 while wages have risen has brought millions of additional people into higher tax bands — a phenomenon known as fiscal drag.

VAT at the standard rate of 20% raises approximately £176 billion. Corporation tax was raised from 19% to 25% in April 2023, boosting receipts to approximately £85 billion.

How much tax does the UK collect per year?

HMRC collected approximately £1.1 trillion in tax in 2024/25 — around 35% of GDP. This is the highest tax burden as a share of the economy since the 1940s.

How much income tax does the UK collect?

Income tax raises approximately £268 billion in 2024/25 from around 35 million taxpayers. The basic rate is 20%, higher rate 40%, additional rate 45%.

What is the UK VAT rate?

The standard UK VAT rate is 20%, raising approximately £176 billion per year.

Why is the UK tax burden at a record high?

Income tax and NI thresholds have been frozen since 2021 while wages rose with inflation (fiscal drag). Corporation tax was also raised from 19% to 25% in 2023.

How does UK taxation compare to other countries?

At around 35% of GDP, the UK's tax burden is below the EU average of approximately 40% and significantly below Scandinavian countries, but higher than the USA (27%) and Australia (29%).

What is corporation tax in the UK?

UK corporation tax was raised from 19% to 25% in April 2023 for companies with profits over £250,000. A small profits rate of 19% still applies to companies with profits under £50,000. The rise increased corporation tax receipts to approximately £85 billion in 2024/25, making it the third largest source of tax revenue after income tax and VAT.

What is fiscal drag and how does it affect UK taxpayers?

Fiscal drag is the effect of keeping tax thresholds fixed while wages rise with inflation, pulling more people into higher tax bands without a formal rate rise. The UK personal allowance (£12,570) and higher rate threshold (£50,270) have been frozen since 2021. As wages have grown with inflation, millions of workers have been pushed into paying income tax for the first time or into the higher 40% rate — raising significant additional revenue without any announced tax increase.

What is the UK's tax-free personal allowance?

The UK personal allowance — the amount you can earn before paying income tax — is £12,570 in 2024/25. This has been frozen since 2021. Above this, income up to £50,270 is taxed at 20% (basic rate). Income between £50,270 and £125,140 is taxed at 40% (higher rate). Income above £125,140 is taxed at 45% (additional rate). The personal allowance is gradually withdrawn above income of £100,000.