In January 2026, the UK government reported something that would have seemed unlikely a few weeks ago, if not a bit bonkers: a monthly budget surplus of £30.4 billion, the highest since records began in 1993.
Chancellor Rachel Reeves was quick to present the numbers as evidence of fiscal discipline and positive economic news. But when you look more closely at what actually drove the surplus, a striking picture emerges – because whilst there is certainly a chunk of declared self-assessment revenues in there, as well as income tax and national insurance, a significant portion of that surplus has also been built on the backs of property owners, home buyers, and families who have spent decades building wealth through bricks and mortar only to find themselves hit by inheritance tax.
There are three property-related taxes in particular that tell much of the story.
Capital Gains Tax: Big Numbers, But Important Context Required
Capital Gains Tax (CGT) receipts hit £17 billion in January 2026. That is a 69% increase on the same month the previous year.
That is a figure that has dominated the headlines over the past week, but it needs context.
There is a January spike every year, and it is primarily a self-assessment story: 31 January is the annual deadline for reporting gains on shares, investment portfolios, and business assets, and much of this year’s surge reflects investors crystallising gains ahead of higher CGT rates introduced in the October 2024 Budget.
The property-related element of CGT however is more spread out throughout the year, since most sellers must pay within 60 days of completion.
Nevertheless, the property picture is significant and growing. HMRC data shows that in 2024/25, 163,000 taxpayers filed a CGT on UK Property return, up 28% on the previous year, with total liability rising 33% to £2.2 billion.
That was a record at the time, but this year seems set to break it. Rolling receipts to January 2026 already stand at £1.8 billion with two months still to go, strongly suggesting that this year’s figure will comfortably exceed last year’s record.
For landlords and second-home owners, higher CGT is a real and ongoing incentive to sell, with direct consequences for rental supply.
Stamp Duty Land Tax: Frozen in Time
Homebuyers paid £899 million in Stamp Duty in January alone – up 6% on the same month last year. Full-year SDLT receipts have already reached £15.4 billion, and that is an 18% rise on the year before.
The increase partly reflects more transactions, but there is a deeper story which is more structural. The nil-rate band was cut from £250,000 back to £125,000 in April 2025, and the first-time buyer threshold dropped from £425,000 to £300,000, drawing a wider range of purchases back into scope.
And herein lies the real issue: when the £125,000 threshold was introduced in 2014, the average UK property cost £176,561. By December 2025 that had risen to £270,259.
In areas like Edgware where average prices sit around £570,000, and where even a typical semi-detached home averages around £650,000 according to Rightmove figures, the gap between what thresholds reflect and what buyers actually pay is substantial.
Buyers are not purchasing larger or more valuable homes in a meaningful sense; they are simply paying more tax because prices have risen while thresholds have stood still. One executive from Coventry Building Society has put it plainly: the current threshold “might have made sense in 2014, but house prices have moved on dramatically since then.” The case for reform is increasingly hard to argue against.
Inheritance Tax: A Stealthy Expansion
IHT receipts between April 2025 and January 2026 totalled £7.1 billion, up £100 million on the same period last year, with the Office for Budget Responsibility forecasting a full-year take of £9.1 billion.
The mechanism is familiar: frozen nil-rate bands combined with rising property values are drawing more ordinary families into the IHT net, often without them realising.
For most people, their home is their single largest asset, and it is increasingly the asset through which IHT liability is generated. Looking ahead, current proposals would bring pension assets within the scope of IHT from April 2027, subject to legislation.
A Surplus Built by Standing Still
Taken together, these three tax streams reveal a revenue system that is, to a meaningful degree, shaped by property taxes; not because the market is more active, but because thresholds have failed to keep pace with reality.
SDLT revenues rise as frozen bands are outpaced by price growth. IHT receipts expand as static allowances collide with rising asset values. CGT on property climbs as more owners exit a market that itself has been reshaped by tax.
As the Spring Statement on 3 March approaches, the question worth asking is not just whether the surplus is real – it is, and we have to allow that this is generally good news.
Nevertheless, there are questions that this provokes. Is the tax architecture that produced it fair? Is it sustainable? And is it really fit for the property market as it exists today?
Q&A: What Homeowners in North London are Asking
Why did January 2026 produce a record surplus?
The £30.4 billion surplus was primarily driven by self-assessment payments landing on 31 January, when CGT on shares, portfolios, and business assets becomes due for the full tax year. Property-related taxes including CGT on sales, Stamp Duty, and Inheritance Tax have all contributed, but the timing of self-assessment amplified the headline figure considerably.
How do frozen Stamp Duty thresholds affect buyers in Edgware?
With average prices in Edgware sitting above £570,000 and typical semi-detached homes closer to £650,000, even modest moves now attract significant SDLT bills. The thresholds designed to protect first-time buyers and moderate-value transactions no longer reflect local market realities, making it harder for growing families and upsizers to move even when their housing needs have genuinely changed.
Why are more families being drawn into Inheritance Tax?
The nil-rate bands have been frozen while property values have continued to rise, meaning estates that would have sat comfortably below the threshold a few years ago are now caught by it. The family home, often a person’s largest single asset, is increasingly the mechanism through which IHT exposure is created, with the potential inclusion of pension assets from 2027 adding a further dimension.
What does all this mean for property owners, buyers and landlords locally?
For anyone buying, selling, letting, or planning to pass on property in areas like Edgware and across London, tax is a central part of every significant decision. Understanding how CGT, Stamp Duty and Inheritance Tax interact with local prices matters hugely, whether you are planning a sale, budgeting for a move, or thinking about how best to structure your affairs for the next generation.