A stealth tax raid is set to hammer UK households who are dragged into a NEW BAND by HMRC. Under the Labour Party government, the number of higher-rate taxpayers is projected to surge by 2.5 million in 2025-26 due to the freeze on tax thresholds.
The Office for Budget Responsibility (OBR) predicts that 7 million will pay 40 per cent tax in the coming tax year – 2.5 million or 55 per cent more compared to if income tax thresholds had never been frozen by the previous Conservative Party government.
The watchdog forecasts that 3.5 million workers will start paying income tax in the 2025-26 tax year because of the sneaky freeze that began in 2021. Meanwhile, 2.5 million will be dragged into the higher tax band which applies to earnings over £50,270.
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On top of this, 400,000 will enter the additional-rate threshold, paying 45 per cent on earnings above £125,140. A spokesman for the Treasury said: “We are committed to keeping taxes low for working people, which is why we protected payslips from tax rises and are not extending the freeze on personal tax thresholds past 2027-28.”
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, said: “More of us are taxpayers now, and more pay tax at higher rates. Gone are the days when being a higher-rate taxpayer was the preserve of the very wealthy – now, around a fifth of taxpayers pay higher or additional rates.
“Between us, we’re paying billions more in tax than we did this time last year, and it’s only going to get worse because those tax thresholds have been frozen until April 2028. It means the idea of generating a tax-free income has become even more attractive.”
Sir Keir Starmer said previously: “When it comes to tax, [Mrs Badenoch] knows very well the limits of what I can say from this despatch box, but we have an ironclad commitment to our fiscal rules. We can’t just tax our way out of the problems that they (the Conservatives) left us, which is why we put in place tough… spending decisions. They wouldn’t take them, and we’ll stick to those spending decisions and our focus is absolutely on growth.”