Threshold freeze equivalent to 3.5% tax hike

The government's freeze on income tax thresholds will see some workers' tax bills rise by the equivalent of a 3.5% hike in the headline rate of tax, according to analysis by investment platform AJ Bell.

29 Nov 2022

The government's freeze on income tax thresholds will see some workers' tax bills rise by the equivalent of a 3.5% hike in the headline rate of tax, according to analysis by investment platform AJ Bell.

Someone on a salary of £50,000 will pay just under £59,000 in income tax over the six years of the threshold freeze, the research found. The total tax bill will be more than £9,000 higher than it would have been if tax thresholds had been uprated with inflation during that time, illustrating the damaging effect of fiscal drag on earnings.

The freeze does not only hit higher earners, as the average £33,000 earner will also see an equivalent 2% increase to a base rate of 22%.

Laura Suter, Head of Personal Finance at AJ Bell, said: 'These figures lay bare just how much the decision to freeze tax allowances will cost taxpayers over the six years of the freeze.

'They also highlight the sneaky tactics employed by the government to nab more money from our pay packets without many taxpayers realising.

'Imagine the uproar and headlines if the government had increased the basic rate of tax from 20% up to 23.5%. Not least because it would break a manifesto commitment. But, more importantly for voters, it would be much easier for them to understand the scale of the huge hike in their tax bill in the next few years.'

Quick Links

Home | Contact us | Accessibility | Disclaimer | Help | Site map |

© 2023 Blue Spire Limited (Brighton). All rights reserved.

We use cookies on this website, you can find more information about cookies here.

Blue Spire Limited (Brighton) are Accountants in Brighton.

Contact Brighton Office

Tel: +44 (0)1273 739533
Fax: +44 (0)1273 732844
Email: brighton@bluespiregroup.com


Contact Chichester Office

Tel: +44 (0)1243 781234
Fax: +44 (0)1243 791770
Email: chichester@bluespiregroup.com

Brighton Address
5th Floor Intergen House, 65-67 Western Road, Hove, East Sussex BN3 2JQ

Chichester Address
Cawley Priory, South Pallant, Chichester, West Sussex PO19 1SY

Blue Spire Limited is Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales C004152645. Professional indemnity insurance is provided by Royal & Sun Alliance Insurance Plc 9th Floor, One Plantation Place, 30 Fenchurch Street, London, EC3M 3BD and its territorial coverage is worldwide (excluding United States/Canada).
Blue Spire Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. FSA register https://www.fca.org.uk/register reference 566257. This guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at customers based in the UK