London Daily

Focus on the big picture.
Sunday, Jul 13, 2025

Frozen taxes set to raise £25bn by 2027-28, says think tank

Frozen taxes set to raise £25bn by 2027-28, says think tank

High inflation has pushed up the projected revenue take from the Government’s personal tax threshold freeze, the Resolution Foundation said.
High inflation has pushed up the projected revenue take from the Government’s personal tax threshold freeze to £25 billion by 2027-28, according to a think tank.

With the 2023/24 tax year starting on April 6, the Resolution Foundation analysed the personal tax and benefit changes taking effect.

Its report said: “Perhaps the most important piece of personal tax policy in 2023-24, though, is the decision not to raise the starting point for income tax and personal national insurance, nor the higher rate threshold.

“These remain frozen at £12,570 and £50,270 respectively, and are set not to rise before April 2028.

“If the usual CPI (Consumer Prices Index) uprating had happened this April, then those thresholds would be rising by 10.1% to £13,840 and £55,340.

"Perhaps the most important piece of personal tax policy in 2023-24, though, is the decision not to raise the starting point for income tax and personal national insurance, nor the higher rate threshold"

“For a basic-rate paying employee, that change would have been worth just over £400 (including national insurance, or £250 without), while a higher-rate payer would have gained over £900 overall.”

The report looked at the potential difference to revenue from income tax and national insurance, if the two main tax thresholds went up in line with inflation each year, rather than being frozen.

It said: “The six-year freeze as a whole is now projected to raise £25 billion in 2027-28.”

Many benefits and the state pension are rising by 10.1% in the new tax year.

More than eight million households receiving means-tested benefits will also benefit from enhanced cost-of-living payments in 2023-24, worth £900 over the next year.

Pensioners and those receiving disability benefits will see their additional payments repeated in 2023-24 and many workers will benefit from a 9.7% rise in the National Living Wage from April.

These increases will be crucial for low-income households to cover rising costs, the Foundation said.

It said the average B and D council tax bill in England will rise by 5.1% in April, equivalent to £99, while low-income households that rent remain under pressure from the continued freeze of the local housing allowance.

Higher-income households will bear the brunt of April’s tax changes, according to the Foundation, whose work is focused on improving living standards for those on low to middle incomes.

The starting point for the top rate of income tax will fall from £150,000 to £125,140, while the dividend allowance and capital gains tax annual exempt amount are being cut.

The dividend allowance is falling from £2,000 to £1,000 and then £500 next year and the capital gains tax annual exempt amount is falling from £12,300 to £6,000 and then £3,000 next year.

The reduction in income tax thresholds and dividend allowance will cost the top 5% of the population £2,000 on average, equivalent to an income reduction of around 1%, the Foundation said.

"The myriad tax and benefit changes introduced this April highlight the challenges of such a patchwork approach to policy"

The Foundation said that, taken together, the tax and benefit changes taking place from April will provide significant support for lower-income households during the cost-of-living crisis.

The poorest tenth of the population are set to gain £500 on average next year, compared with a loss of £100 for a typical household, and a loss of £1,500 for the richest tenth.

Adam Corlett, principal economist at the Resolution Foundation, said: “High inflation has pushed up the projected revenue take from the Government’s personal tax threshold freeze to £25 billion a year – almost triple the amount forecast when the freeze was introduced.”

He added: “The myriad tax and benefit changes introduced this April highlight the challenges of such a patchwork approach to policy, which relies on short-term support schemes, stealth tax rises, and an unfair council tax system.

“Difficult decisions on tax and spending policies lie ahead, but policymakers should be honest with voters about the trade-offs of these decisions.”

The Liberal Democrats are calling for the energy price guarantee to be cut to £1,971 and for the warm home discount and winter fuel payments to be doubled.

This would be paid for through a windfall tax on the oil and gas companies and a tax on the bonuses of their senior executives, the party said.

Lib Dem treasury spokesperson Sarah Olney said: “Now more than ever, hard-working people deserve a fair deal.”

A Treasury spokesman said: “After borrowing £400 billion to help the country through the pandemic and (Russian President Vladimir) Putin’s energy price shock, we have had to take some difficult decisions to balance the nation’s books and to halve inflation this year.

“To help families with the cost of living, we are providing £3,300 of support on average per household this year and next – funded through windfall taxes on energy profits.

“For the first time ever, people can now earn £1,000 a month without paying a penny in income tax and national insurance.

“Thanks to a decade of tax reform, we have taken millions out of paying tax altogether.”
Newsletter

Related Articles

0:00
0:00
Close
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
President Trump Visits Flood-Ravaged Texas, Praises Community Strength and First Responders
From Mystery to Meltdown, Crisis Within the Trump Administration: Epstein Files Ignite A Deepening Rift at the Highest Levels of Government Reveals Chaos, Leaks, and Growing MAGA Backlash
Trump Slams Putin Over War Death Toll, Teases Major Russia Announcement
Reparations argument crushed
Rainmaker CEO Says Cloud Seeding Paused Before Deadly Texas Floods
A 92-year-old woman, who felt she doesn't belong in a nursing home, escaped the death-camp by climbing a gate nearly 8 ft tall
French Journalist Acquitted in Controversial Case Involving Brigitte Macron
Elon Musk’s xAI Targets $200 Billion Valuation in New Fundraising Round
Kraft Heinz Considers Splitting Off Grocery Division Amid Strategic Review
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
EU Proposes New Tax on Large Companies to Boost Budget
Trump Imposes 35% Tariffs on Canadian Imports Amid Trade Tensions
Junior Doctors in the UK Prepare for Five-Day Strike Over Pay Disputes
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
Bitcoin Reaches New Milestone of $116,000
Biden’s Doctor Pleads the Fifth to Avoid Self-Incrimination on President’s Medical Fitness
Grok Chatbot Faces International Backlash for Antisemitic Content
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
×