What a freeze on income tax thresholds means for you
- The freeze on income tax thresholds has been extended until the 2030-2031 tax year for taxpayers in England, Wales, and Northern Ireland.
- This extension is projected to raise £7.6 billion in revenue by 2030 and will lead to an increase in the number of UK taxpayers.
- The policy relies on 'fiscal drag', where more people are pulled into higher tax brackets as their wages rise with inflation, without the tax thresholds being adjusted.
- The Office for Budget Responsibility (OBR) estimates that by 2029-30, an additional 780,000 people will start paying income tax, and 920,000 more will move into the higher tax rate.
- The frozen personal allowance means more part-time minimum wage workers will begin paying income tax, while the Chancellor may have avoided directly increasing income tax rates.