Nobody Voted for This Tax Rise

Andy Burnham's new government spent Wednesday discovering how little room it has. Inflation dipped to 2.6% in June, but economists called it a false dawn — an energy-cap jump and the Iran oil shock point back above 3%, maybe 4%, before autumn. Meanwhile the stealth taxes are already running: inheritance-tax receipts hit a record £2.3bn in the quarter to June, £96m up on last year, as thresholds Rachel Reeves froze to 2031 drag ordinary estates into a net built for the rich. And the arithmetic only worsens from here: chancellor John Healey inherits a £22bn hole from Burnham's uncosted pledges, the exact gap Reeves once claimed — with income tax, VAT and NI ruled out, a third straight year of tax rises looks all but written.

Crypto, meanwhile, spent the day being pulled by strings that aren't its own. Bitcoin held near $66,300, a two-week high, but the move came from silicon, not satoshis — a US chip gauge ripped 5% out of bear-market territory and Korea's Kospi leapt with it, while the yen sank past 163 to the dollar, a 40-year low that hands the debasement case its moment. The asset built to escape the system is trading like a chip stock in a hoodie. In Washington, the Crypto Clarity Act stalled on a single clause — who polices a crypto ban on a president whose family sells the stuff — against an August 7 deadline. Years of lobbying, snagged on who watches the watchmen.

A new government boxed in by frozen thresholds and an old £22bn hole, and a Bitcoin taking its cues from chip stocks — not much moved this week for the reason on the label. To the rest of the issue. — M.B.

Rachel Reeves spent two years blaming a £22bn black hole she inherited in 2024. Now she has handed one the same size to her successor. John Healey inherits £22bn of Burnham-era pledges that official forecasts never counted — and economists already call Healey tax rises this autumn all but guaranteed. His maiden Budget has not been written yet. Its central problem already has. That’s not a spending story, it’s an arithmetic one.

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Inheritance tax was meant to be a tax on the wealthy. A record £2.3bn of receipts in the three months to June 2026 suggests otherwise. Frozen thresholds are quietly dragging ordinary families into a net once reserved for large estates — and inheritance tax receipts are climbing fastest exactly where nobody planned. That’s not a tax on the rich anymore, it’s a tax on rising house prices.

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Defence stocks do not usually cheer a change of chancellor. But this one is different. John Healey quit the last government over defence funding — and now he controls the Treasury. Babcock (LON: BAB) surged more than 6.5% and Rolls-Royce (LON: RR) hit 1,369p as investors piled in to buy, betting the man who resigned over military spending will finally open the taps.

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The neat trick of a frozen tax threshold is that nobody has to vote for it and nobody gets to vote against it — the record inheritance-tax haul just arrives, year after year, like weather. Burnham could raise a fortune this autumn by doing precisely nothing. The cheapest tax rise is the one you never announce. — MJB.