Income tax threshold freeze will hit poorer households harder, experts say

"The manifesto tax pledge has cost working people. Having previously hinted at raising income tax rates, the chancellor chose instead to freeze personal tax thresholds for three more years. A 1p tax rise would have raised the same amount of money but been less costly than freezing thresholds for anyone with an income below 35,000, she said."

"Indeed, all but the top 10% of the income distribution are worse off because of opting for threshold freezes over rate rises. Ironically, sticking to her manifesto tax pledge has cost millions of low-to-middle earners, who would have been better off with their tax rates rising than their thresholds being frozen."

"More than 1.7 million workers will be dragged into either paying tax for the first time or pushed into a higher band by an additional three-year freeze on income tax and national insurance thresholds."

Freezing income tax thresholds to 2031 will disproportionately reduce living standards for taxpayers in the bottom half of the income scale. More than 1.7 million workers will be dragged into paying tax for the first time or pushed into higher bands by an additional three-year freeze on income tax and national insurance thresholds. The measure is projected to raise £12.4bn by 2030-31. The chancellor conceded the impact on working people while denying a breach of the manifesto pledge. The Resolution Foundation argued that increasing headline income tax rates would have affected all households and raised more revenue from the better off, and that a 1p rise would have been less costly for incomes below £35,000.

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