New HMRC data shows just how much the UK tax mix relies on four major taxes: income tax, National Insurance, VAT and corporation tax.
For business owners, directors and employers, this matters because changes to the tax system do not always arrive as headline rate rises. They can also come through frozen thresholds, adjusted allowances, employer costs and smaller changes across the wider system.
Why the four main taxes matter
The Labour Party went into the 2024 general election with pledges on four major taxes in its manifesto.
“Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”
“Labour will cap corporation tax at the current level of 25 per cent, the lowest in the G7, for the entire parliament…”
At the time, those tax promises were seen as politically necessary. They helped counter suggestions that a Keir Starmer government would follow a tax-and-spend approach.
However, the quadruple tax lock was widely criticised by many economists. Their concern was that it placed a five-year constraint on the Chancellor during uncertain economic times.
What HMRC’s latest figures show
Fast forward about two years from the publication of that manifesto, and those concerns have become more relevant.
New HMRC data, published at the end of April, showed that income tax, National Insurance, VAT and corporation tax accounted for 86% of all tax receipts in the past tax year.
That is not unusual in itself. Over the past ten years, these four taxes have accounted for more than £4 out of every £5 collected.
However, the figures show how narrow the UK tax mix has become. When so much revenue depends on a small number of taxes, any promise not to raise them limits the Chancellor’s room for manoeuvre.
Income tax receipts have still risen
Despite the manifesto promise not to increase income tax rates, income tax receipts rose by 9% in 2025/26 compared with the previous year.
That increase was faster than price growth and faster than growth in the UK economy.
The reason is largely fiscal drag. The personal allowance and tax thresholds have been frozen, which brings more people into tax and pushes more existing taxpayers into higher tax bands.
For individuals, company directors and employees, this can mean paying more tax even if headline income tax rates have not changed.
National Insurance has risen even faster
National Insurance receipts grew faster still, rising by 16.3%.
This was helped by changes to the level of employer’s National Insurance contributions, which challenged the spirit of the manifesto pledge.
Together, National Insurance and income tax accounted for 56.5% of everything that flowed into HMRC’s coffers.
For employers, that matters. Higher employer National Insurance can directly affect staffing costs, recruitment decisions and wider business planning.
VAT and corporation tax grew more slowly
The increase in taxes on earnings contrasted with the growth in VAT, which is the third largest source of tax.
VAT receipts grew by 5.7%.
Corporation tax grew more slowly, increasing by 4.6%. One possible reason is that employers claimed more tax relief on their higher National Insurance contributions.
For companies, this is a reminder that tax changes rarely sit in isolation. A change in one area can affect the position elsewhere.
Why this matters for businesses
The latest figures are not just a Westminster tax story.
They help explain why businesses can feel more tax pressure even when some headline rates remain unchanged.
A frozen threshold, a payroll cost increase or a targeted adjustment can still affect cash flow, margins and planning decisions.
That is why it is worth looking beyond the headline announcements. The wider UK tax mix can tell us where pressure is building and where future adjustments may be more likely.
What could happen next?
The dominance of the four major manifesto-locked taxes helps explain why the Chancellor has made so many tweaks to the overall tax system to raise additional revenue.
It is beginning to look like that process could be repeated at the next Budget.
For businesses, this does not mean acting on speculation. However, it does mean keeping tax planning, payroll costs and cash flow under regular review.
If you are unsure how recent or upcoming tax changes may affect your business, speak to AMMU for advice. HMRC’s latest bulletin on tax receipts and National Insurance contributions is available online.