Chancellor Rachel Reeves' decision to extend the freeze on personal income tax thresholds until 2031 will disproportionately affect middle-income workers, according to a new analysis by the Institute for Fiscal Studies (IFS). Those earning £48,000 a year will pay an extra £603.50 annually by the end of the freeze, while individuals earning £150,000 will see an increase of just £393.59.
The stealth tax raid, confirmed in the November Budget, will hit workers such as police officers, teachers, and nurses. Those on £46,000 will pay an additional £410.46 a year. The IFS figures indicate that the burden falls most heavily on middle earners rather than the highest earners, contradicting the Chancellor's assertion that those with the 'broadest shoulders' would contribute the most.
Shadow Chancellor Sir Mel Stride criticised the move, stating: 'She said the wealthiest would contribute the most, but the biggest tax rise in her Budget was a stealth tax which hits middle earners the hardest.' He argued that the decision was a choice, not a necessity, and that working people are being punished to fund increased benefits spending.
Ms Reeves defended the freeze, saying it was not a breach of the manifesto and that 'everybody' must contribute more. However, while in opposition, she had likened similar moves by the previous government to 'picking the pockets' of working people. The freeze is expected to drag an additional 5.2 million low earners into income tax and push 4.8 million middle earners into the 40p tax rate, originally designed for the wealthy.
