Patrick O'Donnell
Guest Reporter
Families may have to pay up to £16,500 more in taxes if Chancellor Rachel Reeves extends the existing freeze on tax allowances in the upcoming Autumn Budget.
Taxpayers have been hit by fiscal drag as a result of her predecessor Jeremy Hunt's decision to keep tax thresholds at their current rate until 2028.
This is the term used to describe when wages and inflation rise during a period when allowances are frozen.
As a result of this, workers are dragged into higher tax brackets and find themselves paying more to the HM Revenue and Customs (HMRC).
Speculation is rife over what the Chancellor will likely include in her fiscal statement on October 30 but many analysts believe a continuation of Hunt's policy is on the cards.
The former Treasury boss's allowance freeze has previously been slammed as a "stealth tax" on hard-working Britons.
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It is understood that Reeves is considering keeping tax allowances frozen until 2030, The Telegraph reports.
If implemented, the extension raise an estimated £7billion for the Treasury annually.
This would avoid Labour having to directly U-turn on its pledge to raise taxes on "working people", which is supposed to cover taxes, National Insurance and VAT.
Under the Conservatives, the "stealth tax" raid would have seen a worker earning just under £70,000 pay just below £15,000 for the 2024/25 tax year.
Calculations suggest a two-year extension under Labour would add more than £8,266 to this tax bill, raising its cost by around a third.
In past years, the £12,570 personal savings allowance and basic rate thresholds have been increased by the previous September's inflation rate.
High-earning couples could be worst hit under a stealth raid from Reeves losing £16,532 if the allowance freeze continues until 2030.
The Telegraph reports the tax burden would be raised by 55 per cent, boosting the loss from £29,856 to £46,388.
LATEST DEVELOPMENTS:
An individual earning the average salary of £43,200 under the Conservative allowance freeze would see their bills go up by under £3,000 until 2028.
However, an extension by the new Chancellor would add £1,654.
It is estimated that the total cost of the stealth tax raid would go up by 36 per cent
A UK Government spokesperson said: "We do not comment on speculation around tax changes outside of fiscal events."
Find Out More...
Taxpayers have been hit by fiscal drag as a result of her predecessor Jeremy Hunt's decision to keep tax thresholds at their current rate until 2028.
This is the term used to describe when wages and inflation rise during a period when allowances are frozen.
As a result of this, workers are dragged into higher tax brackets and find themselves paying more to the HM Revenue and Customs (HMRC).
Speculation is rife over what the Chancellor will likely include in her fiscal statement on October 30 but many analysts believe a continuation of Hunt's policy is on the cards.
The former Treasury boss's allowance freeze has previously been slammed as a "stealth tax" on hard-working Britons.
Do you have a money story you’d like to share? Get in touch by emailing [email protected].
It is understood that Reeves is considering keeping tax allowances frozen until 2030, The Telegraph reports.
If implemented, the extension raise an estimated £7billion for the Treasury annually.
This would avoid Labour having to directly U-turn on its pledge to raise taxes on "working people", which is supposed to cover taxes, National Insurance and VAT.
Under the Conservatives, the "stealth tax" raid would have seen a worker earning just under £70,000 pay just below £15,000 for the 2024/25 tax year.
Calculations suggest a two-year extension under Labour would add more than £8,266 to this tax bill, raising its cost by around a third.
In past years, the £12,570 personal savings allowance and basic rate thresholds have been increased by the previous September's inflation rate.
High-earning couples could be worst hit under a stealth raid from Reeves losing £16,532 if the allowance freeze continues until 2030.
The Telegraph reports the tax burden would be raised by 55 per cent, boosting the loss from £29,856 to £46,388.
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An individual earning the average salary of £43,200 under the Conservative allowance freeze would see their bills go up by under £3,000 until 2028.
However, an extension by the new Chancellor would add £1,654.
It is estimated that the total cost of the stealth tax raid would go up by 36 per cent
A UK Government spokesperson said: "We do not comment on speculation around tax changes outside of fiscal events."
Find Out More...