The Tax Rise Nobody Voted For

Nobody stood up in Parliament and announced an income tax rise. The basic rate is still 20%. The higher rate is still 40%. And yet millions of people are paying more income tax than they were five years ago, and will pay more again next year.

The mechanism is a freeze, and it has been running since April 2021.

What is actually frozen

Two numbers matter most:

• The personal allowance — £12,570. The amount you can earn before you pay any income tax at all.
• The higher rate threshold — £50,270. The point at which you start paying 40% on the next slice of your income.

Both have been stuck at those figures since April 2021. Normally they rise each year with inflation — that is the default position written into the law. It has simply been switched off.

The freeze was first announced by Rishi Sunak in March 2021 and meant to run to 2026. Jeremy Hunt extended it to 2028. At the Autumn Budget in November 2025, Rachel Reeves extended it again, to April 2031.

By the time it ends, income tax thresholds will have been unchanged for a decade.

Why a freeze is a tax rise

Because wages do not stand still.

If your pay rises 4% and the threshold rises 4%, nothing much changes — you keep roughly the same proportion of your income. If your pay rises 4% and the threshold does not move at all, a bigger slice of your earnings falls above the line. You pay tax on more of what you earn, even though the rate never changed.

Economists call this fiscal drag. Most people call it not understanding why their payslip has not improved.

It works at both ends. People on low incomes who were previously below the personal allowance get pulled into paying income tax for the first time. People in the middle get dragged from the basic rate into the higher rate, which is where it bites hardest — a jump from 20% to 40% on the income above the line.

What it looks like in real money

The Institute for Fiscal Studies has calculated that if the personal allowance had risen with inflation since April 2021, it would stand at around £16,070 today rather than £12,570. That is roughly £3,500 of income that would have been tax-free and is not.

The Office for Budget Responsibility estimates the threshold freeze will raise over £55 billion in 2030/31 alone. The extension announced in 2025 — just the extra three years — is forecast to bring around 700,000 more people into paying income tax by 2030/31 than would otherwise have been the case.

Analysis by AJ Bell put the cost of those three extra years at up to around £1,292 for someone earning £47,000, because they are the group most likely to be dragged over the higher rate threshold as wages rise.

Who this affects

Effectively everyone earning above £12,570. That includes:

• Part-time and low-paid workers now crossing the personal allowance for the first time
• Anyone whose pay has risen roughly in line with inflation, who is paying a larger share of it in tax
• People approaching £50,270, who will find the higher rate arriving sooner than they expected
• Pensioners with taxable income above the allowance, including those whose State Pension has risen under the triple lock

It is worth knowing that the £100,000 point at which the personal allowance starts being withdrawn has not moved since 2010 either.

The devolved position

Income tax is partly devolved. Scotland sets its own rates and bands for earned income, so the figures above do not all apply there in the same way. Wales currently keeps parity with England and Northern Ireland.

The personal allowance itself is set UK-wide, so the freeze on the £12,570 figure applies everywhere.

Is there anything you can do

Not about the freeze itself. But it makes a few ordinary things more worthwhile than they used to be:

• Check your tax code. A wrong code is one of the most common reasons people overpay, and it is fixable. HMRC errors are more frequent than most people assume.
• Pension contributions reduce your taxable income, which matters more when the higher rate threshold is closer than it used to be.
• Marriage Allowance lets one partner transfer part of their personal allowance to the other where one earns below £12,570 and the other is a basic rate taxpayer. It is frequently unclaimed.
• Check what you are entitled to. Being pulled into paying tax can interact with benefit calculations in ways people do not expect.

When it ends

On current legislation, thresholds rise again from April 2031. That is subject to whatever future Budgets decide, and the freeze has already been extended twice by two different governments.

Until then, the thing to understand is simple: if your pay rises and the threshold does not, you are paying more tax. That is not an accident or a side effect. It is the policy working as designed.

General rights guidance, not legal advice. Figures verified against GOV.UK, HMRC and House of Commons Library sources, September 2026.