The amount of tax paid by Brits in May has jumped by more than 50% in five years, new statistics have shown. According to figures produced by HMRC, the taxman earned £153.7 billion in tax and National Insurance in May – £9.8 billion more than a year earlier. Overall, the May income tax take has risen by 53% (or £8.1 billion) since May 2021, driven in large part by tax hikes and frozen thresholds.
Sarah Coles, head of personal finance at AJ Bell, said: “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.”
Frozen Thresholds and Dividend Tax Hikes
The finance expert noted that income tax bills have been climbing ever since thresholds were frozen in 2021/22, adding that “the impact of this horrible stealth tax becomes more evident with each passing year.” Ms Coles continued: “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%) since 2021.”
Thresholds are set to stay frozen until at least 2031, which means further tax pain for households. Ms Coles said: “It doesn’t stop with wages, because when we cross a threshold, the rate of tax we pay on savings and investment returns rises too – and the allowance for savings falls.”
Former Tory Chancellor Rishi Sunak introduced the first income tax threshold freeze in 2021, which was set to remain in place until 2026. Rachel Reeves later extended the freeze until 2031 in the November 2025 Budget. She also increased dividend tax from April 2026 from 8.75% to 10.75% for basic-rate taxpayers and from 33.75% to 35.75% for higher-rate taxpayers.
How to Reduce the Tax Burden
For those who worry about the amounts deducted from their pay slips each month, there are ways to reduce their tax burden. One of the “most effective” ways to control an income tax bill is by making extra pension contributions, says Ms Coles. She said: “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. Ms Coles said: “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.”
