The freeze on income tax thresholds is not being extended beyond April 2031, according to Office for Budget Responsibility documents published with the Budget. Earlier reports that the Chancellor, John Healey, had extended it further are not borne out.
The BBC, citing the OBR documents, reports that thresholds are then expected to rise with inflation. It notes that Healey did not mention the end date of the freeze in his speech.
The BBC reports these effects of the freeze, citing the OBR:
- it raises £58bn by 2030-31
- an extra 6.8 million people will be paying income tax by 2031
- an extra 5.4 million will be higher-rate taxpayers by 2031
- almost one in four taxpayers will pay some tax at the higher rate by 2031
Professional Adviser reports that the personal allowance stays at £12,570, the higher-rate threshold at £50,270 and the additional-rate threshold at £125,140. Inheritance tax nil-rate bands stay frozen until 2030.
Healey told MPs he had kept the manifesto promise not to raise tax on working people. Income tax rates are unchanged. The OBR figures show, however, that the frozen thresholds raise £58bn by 2030-31 and pull millions more people into income tax and the higher rate.