Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “December tends to see income tax payments ramp up to the peak in January, as the millions of people yet to file a tax return at this stage finally get round to it – and pay their bills.
“As usual, we saw a rise in tax paid via self-assessment – to £3.1 billion. It’s not just a seasonable blip though.
“It isn’t just five times more than was paid in November, it’s up by a quarter since December 2024.
“Overall income tax, including PAYE, was £25.3 billion – up 12 per cent in a year – after frozen tax thresholds forced more people into paying higher tax bills.
“Capital gains tax fell back before the usual seasonal peak in January, to £231 million. It’s also down almost a third from a year earlier.
“It demonstrates just how much investors have changed their behaviour in the wake of the slashing of the annual allowance and the hiking of the rate on stocks and shares gains.
“There’s every chance some people are just sitting on their gains. It’s a classic example of how raising this tax doesn’t always mean a straight line to more revenue.
“You don’t have to sit on gains to avoid this tax.
“It’s a good idea to realise gains gradually over the years, to take advantage of annual allowances – you can then use the Bed and ISA process to reinvest in an ISA, where gains and dividends are tax-free.
“For new investments it’s a useful reminder that a stocks and shares ISA is a sensible first port of call.”
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