More than 1.7m people will pay more income tax after Chancellor Rachel Reeves announced a three-year extension to the freeze on thresholds that will see some workers dragged into paying the tax for the first time and others shifted into higher bands as earnings increase. It means the income tax personal allowance will remain at £12,750 until 2030/31, while the higher rate and additional rate thresholds will remain at £50,270 and £125,140, respectively. The freeze in thresholds will result in 780,000 more basic-rate, 920,000 more higher-rate, and 4,000 more additional-rate income tax payers in 2029/30. The policy, which applies to income tax and National Insurance contributions, will pull in £8.3bn for the Treasury in 2029/30. Chris Etherington, a tax partner at RSM UK, warned: “Those who may not have considered that they would ever be higher-rate taxpayers at the start of the decade could suddenly find themselves in that camp by the end of it.”
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