UK taxpayers paid £153.7 billion in tax and National Insurance in May, £9.8 billion more than a year earlier, according to the latest HMRC figures. Income tax receipts alone reached £23.4 billion during the month, up 9.7% year-on-year and more than 50% higher than in May 2021, as frozen tax thresholds continue to pull more earners into higher tax bands.
Delving into the figures, AJ Bell said the impact of fiscal drag is becoming increasingly apparent, with millions of workers paying more tax as wage increases outpace unchanged thresholds. The investment platform also highlighted pensions, ISAs and family tax planning as key ways for individuals to help reduce their tax burden.
Sarah Coles, head of personal finance at AJ Bell, comments:
“The taxman carved himself a hefty slice of our cash in May, devouring £153.7 billion in one month alone thanks to a combination of frozen thresholds and a hike in dividend tax.
This May we paid almost 10% more income tax than in May 2025. Income tax bills have been climbing ever since thresholds were frozen in 2021/22, and the impact of this horrible stealth tax becomes more evident with each passing year. Every pay rise has pushed millions of people into paying more tax, and more at higher rates. It’s why the May income tax take has risen by more than half (53%) for the month since 2021.
The fact that thresholds are set to stay frozen until at least 2031 means the tax pain is far from over. And it doesn’t stop with wages, because when we cross a threshold, the rate of tax we pay on savings and investments returns rises too – and the allowance for savings falls.
One of the most effective ways to control an income tax bill is by making extra pension contributions. You get tax relief at your highest marginal rate, so contributions over the higher rate threshold are particularly rewarding. It may not leave you with more money in your pocket today, but it means giving less of it to the taxman and putting more away for retirement.
If you’re paying into a workplace pension, you should also benefit from employer contributions, so you, your boss and the taxman are all helping you build for the future.
If you risk paying tax on savings interest, it’s worth considering a Cash ISA, where your savings can grow completely free of tax. If moving tax bands means a higher tax bill on your investments, then a Stocks and Shares ISA is a sensible first port of call, because it protects against both dividend tax and capital gains tax.
You can also consider tax planning with the wider family. If your spouse or civil partner pays a lower rate of tax, you can transfer assets between you, so you both take advantage of your pensions, ISA allowances and other annual allowances. The lower earner can then hold income-producing assets, so at least some of that income is taxed at a lower rate.”
