Income tax thresholds to remain frozen until 2031

Summarised from 3 outlets · 4 reports · Updated 28 Oct, 15:28 · Archive

Income tax thresholds will remain frozen until 2031, pushing more workers into higher tax bands through fiscal drag.

Income tax thresholds will remain frozen until 2031, adding to the tax burden on millions of workers and pensioners. Chancellor John Healey did not mention the freeze in his recent budget, but official documents confirm it remains in place. The freeze was originally introduced by Rishi Sunak in 2021 and was extended by Rachel Reeves in 2025.

As wages rise in line with inflation, the frozen thresholds will push more lower earners into paying tax and drag existing taxpayers into higher bands. This phenomenon, known as fiscal drag, raises revenue for the Treasury without changing tax rates themselves. Recent estimates suggest the freeze could bring in as much as £55billion annually by 2030.

If the personal allowance had increased in line with inflation since 2021, it would have risen from £12,570 to £16,080. By 2030/31 it would have reached £17,960 based on inflation estimates. Until 2021, UK income tax thresholds were typically increased each year in line with inflation, but this practice was suspended when Sunak announced the initial freeze.

How it is being reported

• How much will frozen income tax thresholds cost you? Our salary calculator reveals the painThe Chancellor confirmed income tax thresholds will remain frozen until 2031, adding to the growing tax burden on millions of workers and pensioners.Daily Mail · 28 Oct, 15:39
• The one thing the chancellor didn't mention that will affect your payThe point at which you start to pay tax, and the point where you tip into paying a higher rate of tax have been frozen for three more years.BBC Business · 28 Oct, 15:11
• Income tax: Healey’s budget leaves thresholds frozen again. How much more will you pay?Tax policy means freezes reduce take-home pay as earnings rise in line with inflation Income tax thresholds are set to remain frozen after John Healey’s first budget as chancellor. One of the biggest tax rises in recent years has happened without a change in the rates at which people are taxed on their incomes. Instead it has come from successive government decisions to keep the thresholds associated with the tax at the same level each year, regardless of inflation. Continue reading...Guardian Business · 28 Oct, 15:01
• How much will frozen income tax thresholds cost you? Our salary calculator reveals the painThe Chancellor confirmed income tax thresholds will remain frozen until 2031, adding to the growing tax burden on millions of workers and pensioners.This is Money · 28 Oct, 13:48

In this story: John Healey · Rishi Sunak · Rachel Reeves · UK · Treasury

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