Reeves’s Wealth-Tax Raid Delivers £30 Billion, the Lowest Deficit Since Labour Took Office — Inheritance and Capital Gains Receipts Up Forty Per Cent on the Year, the Chancellor Gets the Fiscal Win Her Backbenchers Stopped Believing Was Possible, and a Satisfaction Rating of Minus Fifty-Nine Still Makes Her the Most Politically Exposed Person in Cabinet

ONS and HMRC data released Thursday morning confirmed inheritance tax and capital gains tax receipts for 2025-26 came in above £30 billion, nearly forty per cent up on the previous fiscal year and the biggest single-year increase on record for the two wealth-adjacent taxes combined. The figures took the fiscal-year deficit to its lowest level since Labour took office in July 2024. Rachel Reeves, at 13% satisfied and 72% dissatisfied in the latest Ipsos Political Monitor, has the fiscal win of her Chancellorship. She is also the cabinet minister most likely to be moved out of post by mid-June.

The numbers behind the win

Inheritance tax receipts for the fiscal year ending April 5 came in at £9.8 billion, up from £7.2 billion in 2024-25, a 36% annual rise. Capital gains tax receipts came in at £21.1 billion, up from £15.3 billion, a 38% rise. The combined wealth-tax take of £30.9 billion is the largest single-year increase on record. Both categories are benefiting from the package Reeves announced at the October 2024 Budget — a Business Property Relief taper, a capital gains headline rate lift from 24% to 28%, and a disappearance of agricultural relief above £1 million — plus an asset-price backdrop lifted by the pre-Iran-war equity market.

The consequence is a fiscal year deficit of 3.4% of GDP, versus the 4.6% projected by the OBR at the Spring Statement. In pound-sterling terms the government borrowed £17 billion less than the March forecast. Reeves’s Treasury team is already briefing that the undershoot allows Autumn Statement modelling to run on a lower borrowing trajectory across the scorecard period. Her critics on the Labour backbenches — and there are many — say the undershoot is not a vindication of the strategy. It is a vindication of asset prices that have since reversed.

Why the political vulnerability remains

Ipsos has Reeves at 13% satisfied with her performance as Chancellor and 72% dissatisfied — a net score of minus 59, the worst for any sitting UK Chancellor since the satisfaction series began. She is 19 points below Nadhim Zahawi at the same point in his tenure and 26 points below Rishi Sunak at any point in his. The April Ipsos poll also confirms 47% of Britons expect her to be out of the Treasury before the end of 2026, the finding that triggered the succession whispers earlier this month.

The fiscal win announced Thursday does not shift any of those numbers. Voter judgement on the Chancellor has already decoupled from the headline fiscal outturn. Focus-group work for MoreInCommon published last week shows voters associate Reeves with diesel at 189p, energy bills rising 18% from July, and the disappearance of winter fuel payments. They do not associate her with gilt yields. The asymmetry is savage.

The succession case inside cabinet

Angela Rayner’s camp has spent a fortnight quietly briefing lobby journalists that the moment to move on Reeves is after the May 7 local elections, not before. The logic is cold: a May reshuffle before the elections looks like panic, a May reshuffle after the elections — especially one that elevates Pat McFadden or Darren Jones to the Treasury — gives Starmer (if he survives) a reset story and Rayner (if she takes over) a pre-installed loyalist. The £30 billion number on the ledger gives both scenarios a clean handover story. It does not give Reeves a case to stay.

The secondary case comes from Streeting, whose own leadership bid has been defined by health-budget fights with the Treasury throughout 2025. Streeting’s office has quietly pushed back on the wealth-tax win, pointing out that the £30 billion is a paper number attached to asset prices now twelve per cent below the October 2025 peak. If the backing numbers deteriorate through Q2 2026, the fiscal victory becomes retrospectively smaller. Streeting’s own vulnerability on the Mandelson texts means the intervention is careful rather than loud. But the Health Secretary’s team has been telling every Times economics reporter who will listen that the Treasury’s numbers are “backward-looking.”

The Iran war asymmetry

Reeves’s fiscal space matters most to the defence budget the UK is about to have to write. The 40-nation Hormuz coalition she and Starmer have built commits the Royal Navy to a prolonged minesweeping operation in the Gulf that could run six months or more per the leaked Pentagon estimate. Lord Robertson has accused both of “corrosive complacency” on defence, naming Reeves specifically for “vandalism.” The £30 billion undershoot gives the Chancellor the fiscal room to fund the Hormuz contribution. Whether the PM can stay in office long enough to spend the money is the other question.

The broader politics, at fourteen days to May 7, are indifferent to fiscal outturns. Labour is polling 17-19% nationally, fourth behind Reform, Conservatives and the Greens. Every pound of the £30 billion surplus buys nothing on the doorstep. It buys Reeves a talking point for Question Time and a Treasury press conference. Those are the last two things she was asked for by her MPs when they broke for recess two weeks ago.