The UK is on course to see its biggest tax rise in at least 50 years as a result of the freeze on personal thresholds and soaring inflation, according to new analysis.
The Resolution Foundation said taxpayers are set to hand over £40 billion by 2028, up from a forecast £30 billion at the time of Chancellor Jeremy Hunt’s budget in March.
The Government’s policy is to keep income tax and national insurance thresholds frozen until 2028, meaning many will be pulled into higher tax bands.
The Institute for Fiscal Studies has said the freeze will also compound challenges facing the many workers whose earnings are not keeping up with inflation.
It comes as Mr Hunt ruled out sizeable tax cuts this year amid Tory calls for a pre-election giveaway at the Conservative Party conference.
“Abandoning the usual uprating of tax thresholds is a tried and tested way for governments of all stripes to raise revenue in a stealthy way,” Adam Corlett, principal economist at the Resolution Foundation, said.
“But it is the far bigger than anticipated scale of the Government’s £40 billion stealth tax rise that stands out.
“The reality of the largest, and ongoing, tax rise on incomes in at least 50 years is why any talk of pre-election tax cuts will inevitably be seen in the wider context of some far bigger tax rises.”
The Treasury has been contacted for comment.
