“Instead of dragging millions more people into higher tax brackets, the Chancellor should be focused on boosting growth and rewarding work. Freezing thresholds for even longer risks punishing ambition and sending the wrong signal to those who want to get on.”
More than one million taxpayers could see their annual tax bills rise by hundreds of pounds if Chancellor Rachel Reeves prolongs the freeze on income tax thresholds, new research has found.
According to analysis by the House of Commons Library, commissioned by the Liberal Democrats, 1.3 million people would pay an average of £285 more in tax each year by 2030 if the freeze is extended beyond its current end date of April 2028.
The impact would be most severe in London, where around 170,000 taxpayers would face an average annual increase of £350. In the South East, 200,000 earners would see their bills rise by £320 on average.
The measure would generate an additional £10.4 billion for the Treasury by the end of the decade as more workers are pushed into higher tax brackets, a process known as “fiscal drag.”
The threshold freeze was first introduced in 2021 under then-chancellor Rishi Sunak, as the government sought to recover revenue lost during the pandemic.
Although Ms Reeves considered an extension during her first Budget last year, she ultimately decided against it, saying such a move would “hurt working people.” However, reports suggest the Chancellor is once again weighing up the option ahead of her autumn Budget, as weak growth and higher borrowing costs add pressure to public finances.
A former Tory MP told the Post: “Instead of dragging millions more people into higher tax brackets, the Chancellor should be focused on boosting growth and rewarding work. Freezing thresholds for even longer risks punishing ambition and sending the wrong signal to those who want to get on.”
Liberal Democrat leader Sir Ed Davey urged Ms Reeves to rule out the policy, accusing the government of continuing “stealth taxes” that would unfairly squeeze households.
“Rachel Reeves must stick to her word and rule out extending these stealth taxes ahead of the Budget,” he said.
The Treasury said its priority remained boosting growth rather than relying solely on tax rises. A spokesperson told The Times: “The best way to strengthen public finances is by growing the economy, which is our focus. Changes to tax and spend policy are not the only ways of doing this, as seen with our planning reforms, which are expected to grow the economy by £6.8bn and cut borrowing by £3.4bn. We are committed to keeping taxes for working people as low as possible.”
I believe we are on the verge of some very good news. Craig Hamilton Parker predicts that Joe Biden realises he can get all his goods into Europe through Britain and America does a massive trade deal of cars, high tech and arms. So big it shakes the EU! Brexit is officially declared a success. Amazingly he made this prediction in 2017 and the express wrote an article about his vision