Tax Threshold Freeze

Office of Budget Responsibility say the effect of frozen or reduced personal tax thresholds is to increase tax receipts (and reduce household incomes) by £12 billion a year in 2023/24 rising to £25 billion in 2024/25 and £29 billion (1 % of GDP) in 2027/28.

There will be 3.2 million (9%) more tax payers and 2.1 million (47%) more higher-rate taxpayers by in five years time. ‘Fiscal drag’ happens when earnings rise and tax thresholds don’t. More of taxpayer’s income is taxed and more of what is taxed falls into higher tax bands.

To read more visit https://obr.uk/box/the-impact-of-frozen-or-reduced-personal-tax-thresholds/