Frozen tax thresholds to hold back Brits for ten miserable years

In March 2021, Chancellor Rishi Sunak touted the policy of frozen income tax thresholds as "progressive and fair". This stance was reaffirmed by Chancellor Jeremy Hunt in November 2022, who described it as "necessary and fair". However, in October 2024, Rachel Reeves, who succeeded Hunt, announced that the policy would not be extended beyond 2028 as it would "hurt working people".

Yet, just a year later in November 2025, Reeves declared that the policy would in fact continue until at least 2031. She acknowledged that this would affect working people but insisted that everyone needed to "make a contribution". This policy, which freezes income tax thresholds rather than allowing them to rise with inflation, has been embraced by successive Tory and Labour Chancellors who have been in difficult financial situations.

The frozen thresholds are expected to yield at least £50bn for the Treasury by 2031. Over a decade, inflation will push millions into higher tax brackets and many will suffer reduced take-home pay. The policy is particularly detrimental to those earning around £65,000, who are currently paying about £3,500 more in income tax annually than they would if thresholds had risen with inflation.

The Treasury stands to gain around a third of the increase in welfare spending over the same period due to this policy, which is a significant financial burden for taxpayers.