London Daily

Focus on the big picture.
Saturday, Aug 02, 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
Decline in Tourism in Majorca Amidst Ongoing Anti-Tourism Protests
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
Poland Begins Excavation at Dziemiany After New Clue to World War II‑Era Nazi Treasure
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Threatens Canada with Tariffs Over Palestinian State Recognition
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Trump Sues Murdoch in “Heavyweight Bout”: Lawsuit Over Alleged Epstein Letter Sets Stage for Courtroom Showdown
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
×