Economists think that the Chancellor might resort to extending a threshold freeze on tax bands – a form of stealth tax – to help balance the books in the Autumn Budget.
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At the last Budget, Rachel Reeves announced that the Government would not extend the freezes past 2028, but a swathe of high-profile U-turns by the Government in the last month has prompted speculation that tax increases could be coming – and a threshold freeze may be on the cards.
Someone on £60,000 would pay an extra £317 in 2028/29 and an extra £643 the following tax year.
The salary at which people start paying the basic rate of tax, as well as national insurance, is £12,570. The basic rate of income tax above this salary threshold is 20 per cent.
These would typically increase alongside inflation, but have not done so for several years, and will not do so again until 2028 under current plans.
The table below shows the extra tax people at different salary levels would pay in 2028/29 and 2029/30 if the thresholds were frozen in those years.
Increasing the amount paid into the Treasury’s coffers in this way could allow Labour to claim it is not breaking its key manifesto promise of not raising taxes on “working people”.
But the Treasury has, in recent weeks, repeatedly refused to rule out prolonging the freeze on income tax thresholds.
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