Last week we saw a headline that would have seemed pretty unthinkable just a few weeks ago: the UK government recorded its largest ever monthly budget surplus in January 2026, at £30.4 billion.
That’s the highest since records began in 1993.
Chancellor Rachel Reeves has been quick to present these figures as evidence of fiscal discipline taking hold. A success!
But much as we welcome genuine good news, before we get too carried away, we think it's worth looking more carefully at what is actually driving these numbers. Why? Because, when you examine the detail, a striking picture emerges: a significant portion of today’s record surplus has been built on the backs of property owners, home buyers, and the families of people who have spent decades building wealth through bricks and mortar.
Three particular property-relevant taxes tell much of the story – and all three therefore have a direct impact on the people we help buy and sell properties in and around Edgware – day in, day out.
One number that has dominated the headlines is the Capital Gains Tax (CGT) taken in January 2026: around £17 billion. It sounds a lot – and it is – but when we see huge numbers like this we can easily shrug them off, for lack of context.
So here’s some context: £17 billion is an increase of 69% on the same month last year. It is, as one analyst described it, “eye-popping”.
That said, if your first instinct is to picture this as evidence of a surge in second-home and buy-to-let sales – indicative of the landlord exodus, perhaps – there is yet more context to consider.
First of all, though, you would not be alone if that was what crossed your mind. CGT is a tax closely associated with property sales in the public imagination, and the rate-rises announced in the October 2024 Budget (2024, not 2025), from 10% and 20% to 18% and 24% respectively, certainly prompted many landlords and second property owners to consider their positions.
Nevertheless, the January CGT figure is not primarily a property-related statistic.
CGT on residential property is generally (though not entirely) collected on a rolling basis throughout the year, because most sellers should report and pay within 60 days of completion.
This January 2026 surge, by contrast, reflects receipts taken due to the self-assessment payment deadline – January 31 each year, and the point at which the due date for CGT owed on shares, investment portfolios, and business assets from the entire tax year lands.
Much of this is likely to relate to asset sales as investors rushed to crystallise gains before a tax rise kicked in.
The genuine CGT story for property sales is nevertheless significant, however – it is just that, as yet, we don’t know what the full story will be.
We have indications, though.
HMRC data shows that in the 2024/25 tax year, 163,000 taxpayers filed a CGT on UK Property return, reporting 183,000 disposals with a total CGT liability of £2.2 billion.
Those were record figures, then: the number of disposals was up 28% on the previous year, and the CGT liability itself rose 33%. But despite that record, it is likely we are watching it being broken again in real time.
The cumulative CGT collected through the 60-day reporting mechanism between April 2025 and January 2026 already stands at around £1.8 billion, with two months of the tax year still to run. However, on top of what has been reported in rolling 60-day-from-completion payments, there will be additional property CGT still to arrive via self-assessment returns – there always is.
For these reasons, the 2025/26 figure will almost certainly exceed £2.2 billion comfortably when the final numbers are reported.
For the property market, the consequences are real and ongoing and these CGT receipts are evidence of that. Landlords and second-home owners who might otherwise have continued to hold are being prompted to sell. That has direct implications for rental supply.
Higher tax receipts, yes, that sounds like good news; but at what cost?
The second property-related contributor to January's record surplus is SDLT. Homebuyers paid £899 million in stamp duty in January alone – a 6% increase on January 2025 – whilst across the full year, SDLT receipts reached £15.4 billion, up 18% on the £13 billion received the year before.
Now, we have to note that SDLT typically gets paid within 14 days of a sale completing, and hence – from those numbers above – we can see that it is very much a tax which sees receipts spread through the year. That said, £899 million paid in one single month, and that being 6% up on the same time last year, is clearly still significant and worth our time to take a deeper look at.
Partly, this increase in SDLT receipts is down to increased numbers of property sales. But that isn’t the full story.
Rather than signalling a large increase in transaction numbers alone, much of the increase actually stems from the reduction in the nil-rate band from £250,000 back to £125,000 in April, which brought a wider range of transactions back into scope.
On top of this, first-time buyer nil-rate thresholds dropped from £425,000 to £300,000.
Let’s also remember that there is a deeper, more structural issue around Stamp Duty. Arbitrary as it might be, let’s pick a moment in time – say, the moment that the £125,000 threshold was introduced, back in December 2014.
The average UK property price then was £176,561. By December 2025, average sold prices had reached £270,259 – an increase of more than £93,000 on average. Here in London, of course, things scale up significantly, based on our local averages: back in 2014, government data shows average London property prices to have been £464,936; today, the London average according to the ONS is just over £550,000.
In other words, buyers are not paying greater stamp duty not because they are purchasing larger or more valuable homes in any meaningful sense, but simply because prices have risen around them whilst SDLT thresholds have remained broadly the same – bar any temporary breaks or holidays, of which there have been a couple.
Here at Petermans Estate Agents in Edgware, we have felt this dynamic acutely. With local property prices in Edgware averaging at a little above the London average, at around £570,000 overall, and with typical semi-detached homes averaging around £650,000, according to Rightmove figures, we can see how stamp duty at current thresholds represents a genuine upfront barrier to mobility. Not only that, but it falls heavily on precisely the buyers our local housing market needs.
Calls for reform are growing. Coventry Building Society's analysis of the HMRC data prompted its head of intermediary relationships to describe the current threshold as one that "might have made sense in 2014, but house prices have moved on dramatically since then." (Did I say picking a 2014 date was arbitrary, earlier? Don’t you believe it.)
It is hard to disagree. Whether reform comes from the current government or forms part of the opposition's emerging platform, the case for updating thresholds to reflect today's market is becoming difficult to argue against.
The third strand of this story is perhaps the least visible, but it might be the most consequential for ordinary families. Inheritance Tax (IHT) receipts between April 2025 and January 2026 totalled £7.1 billion. That is up by £100 million on the same period last year. The Office for Budget Responsibility forecasts a full-year take of £9.1 billion, and this is a target the government is on course to meet.
Frozen nil-rate bands are doing much of the work here. As property values in parts of the country outside London and the South East have seen double-digit annual increases in recent years, families in the South West, the Midlands, and the North are finding themselves drawn into an IHT net that many would have thought well beyond anything they would have to concern themselves with, a few years ago.
In many cases, families find themselves drifting into an IHT liability without realising it.
The family home, often the single largest asset most people will ever own, is increasingly the mechanism through which IHT liability is generated – and we are seeing this play out in these record surplus tax receipts.
It is worth noting, too, that, under current proposals, from April 2027 pension assets will be brought within the scope of IHT – albeit this is still subject to legislation before it passes.
If it does transpire, though, it will mark a change that will further increase exposure for families who have done what successive governments told them to do and saved prudently.
Nevertheless, on this particular issue, it really is the property dimension which remains central.
Taken together, these three revenue streams paint a picture of a tax surplus that is, to a meaningful degree, a surplus shaped by property taxes – even if not entirely so, which of course it is not. Not in the month of January, which is the single month most bolstered by self-assessment tax settlements, bringing in revenues from self-employed income and the sales of non-property assets.
And as always, when we bring ourselves to scratch beneath the surface of property taxes, it raises legitimate questions about sustainability.
The CGT surge, as we have noted, is likely a timing effect rather than a structural increase, and as it goes – whilst it has grabbed the headlines in the last week – it is probably the tax with less of a property-related contribution than the other two mentioned – albeit, we can see the property-relevant CGT element is significant, and growing year on year, from what was already a record setter.
More markedly, SDLT revenues are rising because thresholds have not kept pace with price rises, not because the market is fundamentally more active. In a similar way, IHT is creeping outward as frozen allowance thresholds get pipped by rising asset values.
At Petermans, we are not here to make political arguments. But we do believe that our clients – our sellers and landlords, homeowners planning for the future, and of course any buyers and future buyers we come to deal with – deserve to understand what is driving these numbers and what they mean in practice.
The record surplus is real, and there are ways in which this will spell good news for us all.
But there are questions worth asking as the Spring Statement approaches on 3 March: is the tax architecture that produced this surplus fair? Is it sustainable? And is it fit for the property market as it actually exists today?
We'd be glad to hear your thoughts.
The UK’s £30.4 billion January 2026 surplus was mainly driven by self-assessment tax return payments, which featured higher tax receipts from capital gains tax (CGT) on financial assets. Nevertheless, CGT on property sales, as well as stamp duty land tax (SDLT) and inheritance tax (IHT), have contributed in January, from sales made in November, December and January, and IHT on deaths during the past six months.
Capital Gains Tax receipts hit around £17 billion in January 2026, almost 70% higher than in the same month a year earlier. A large part of that came from investors crystallising gains on shares, portfolios and business assets before higher CGT rates took effect, but there is also a growing property element as more landlords and second?home owners choose to sell rather than hold on.
No – the January spike is primarily about self?assessment payments on gains made across the whole tax year, especially on financial assets. Property?related CGT is usually paid on a rolling basis within 60 days of completion, so its receipts are more spread out, but as more landlords and second?home owners exit, property is still playing a bigger supporting role than in the past.
Stamp Duty receipts have risen because thresholds have moved against buyers, rather than because people are buying larger or more expensive homes. With the main nil?rate band cut back to £125,000 and the first?time buyer threshold reduced, more of each transaction is now caught by SDLT at today’s prices, especially in areas where values have marched on while bands have stood still.
In London – and not least in pockets like Edgware – average prices are now far above the lower SDLT and first time buyer thresholds, so many “ordinary” moves attract large up?front tax bills. That makes it harder for growing families and upsizers to move, and slows the flow of properties through the market, even when people’s housing needs have changed.
More families are finding themselves within the scope of Inheritance Tax because the main allowances have been frozen while property values have risen year after year. As house prices outside London and the South East catch up, and as more of a family’s overall wealth is tied up in their home, it becomes easier for an estate to tip over the threshold without anyone feeling especially “wealthy”.
For most people, their home is the single largest asset they own, so it often makes the difference between an estate being below or above the IHT threshold. As values have increased but the tax?free bands have not, more of the typical family home’s value is now exposed to tax.
Current policy plans point towards more pension wealth being brought within the scope of Inheritance Tax from April 2027, but we should note this is a proposal at this stage and as yet subject to final legislation.
A large surplus built on frozen thresholds and lumpy receipts is unlikely to be sustainable without side?effects. If higher CGT, SDLT and IHT continue to come from people selling, buying and passing on homes, we can expect more pressure on rental supply, reduced mobility for buyers and trickier inheritance planning for families.
For homeowners and landlords in areas like Edgware and across London, these trends mean that tax is a more central part of every decision to buy, sell, let, or pass on property. Understanding how CGT, Stamp Duty and IHT interact with local prices can help you plan ahead, whether that is timing a sale, budgeting for a move, or thinking about how best to structure your affairs for the next generation.
We are required by law to conduct anti-money laundering checks on all those selling or buying a property. Whilst we retain responsibility for ensuring checks and any ongoing monitoring are carried out correctly, the initial checks are carried out on our behalf by Lifetime Legal who will contact you once you have agreed to instruct us in your sale or had an offer accepted on a property you wish to buy. The cost of these checks is £60 (incl. VAT), which covers the cost of obtaining relevant data and any manual checks and monitoring which might be required. This fee will need to be paid by you in advance of us publishing your property (in the case of a vendor) or issuing a memorandum of sale (in the case of a buyer), directly to Lifetime Legal, and is non-refundable. We will receive some of the fee taken by Lifetime Legal to compensate for its role in the provision of these checks.