The Chancellor and the PM will face fury if tax thresholds do not rise with inflation (Image: Jane Barlow/Anthony Upton)
Rachel Reeves has been warned she will break a manifesto commitment if she launches a new tax raid to fill the ￡50billion-plus black hole in the nation’s finances. Fears are growing that the Chancellor will keep the point at which people start paying income tax frozen at just ￡12,570. There is major concern more low-income workers and pensioners will pay the tax if Ms Reeves goes back on plans to scrap the freeze by April 2028.
A landmark report this week warned she will need to find ￡51.1billion in tax hikes and spending cuts a year by 2029-30 to plug a budget deficit of ￡41.2billion and preserve a ￡9.9billion “buffer” against economic shocks. Labour went into the election with the promise not to “increase taxes on working people”. The Chancellor has been told the freeze in thresholds is already hurting the living standards of households – and extending it would be “at odds” with the manifesto pledge.
Article continues belowADVERTISEMENT
Read More
Undo
DON'T MISS
Powered by
Kemi Badenoch warns Keir Starmer over income tax raid to fill ￡51bn blackhole
Keir Starmer refuses to rule out tax hikes after ￡50bn black hole exposed
Andrew Neil completely savages Rachel Reeves in brutal putdown - 'can't blame Tories now!'
'Act now' warning issued as Rachel Reeves eyes 'targeted moves' on pensions and property
Rachel Reeves accused of Middle England tax raid as she scrambles to avoid disaster
Only one tax will help Rachel Reeves plug her Budget black hole - but it will destroy her
Fury over suggestion state pension age could be increased to 80
POLL: Should Starmer and Reeves resign as they leave UK economy on the brink?
The full breakdown of just how Rachel Reeves has blown a ￡51bn black hole in the economy
Savings allowances explained as Rachel Reeves approves tax crackdown
Bombshell Rachel Reeves report leaves BBC Breakfast viewers raging 'Incompetent!'
Rachel Reeves ridiculed Tories 34 times over ￡22bn blackhole - then made one twice as big
UK 'on the brink' as Rachel Reeves massive mistakes are laid bare in full
Exact date all state pensioners will start paying tax after triple lock change
Rachel Reeves thinks tax hikes will fix her ￡51bn black hole - here's why they won't
Eamonn Holmes tears apart Rachel Reeves' 'broken promise' with brutal six words
Rachel Reeves and one phone call she's dreading - but it's all her fault
Huge update on council tax 'cut' for state pensioners as Treasury responds to campaign
Rachel Reeves skewered by furious GB News star after ￡50bn black hole bombshell
State Pensioners urged to act now to earn up to ￡340
Kemi Badenoch warns Keir Starmer over income tax raid to fill ￡51bn blackhole
Keir Starmer refuses to rule out tax hikes after ￡50bn black hole exposed
Andrew Neil completely savages Rachel Reeves in brutal putdown - 'can't blame Tories now!'
'Act now' warning issued as Rachel Reeves eyes 'targeted moves' on pensions and property
Rachel Reeves accused of Middle England tax raid as she scrambles to avoid disaster
Only one tax will help Rachel Reeves plug her Budget black hole - but it will destroy her
Fury over suggestion state pension age could be increased to 80
POLL: Should Starmer and Reeves resign as they leave UK economy on the brink?
The full breakdown of just how Rachel Reeves has blown a ￡51bn black hole in the economy
Savings allowances explained as Rachel Reeves approves tax crackdown
Bombshell Rachel Reeves report leaves BBC Breakfast viewers raging 'Incompetent!'
Rachel Reeves ridiculed Tories 34 times over ￡22bn blackhole - then made one twice as big
UK 'on the brink' as Rachel Reeves massive mistakes are laid bare in full
Exact date all state pensioners will start paying tax after triple lock change
Rachel Reeves thinks tax hikes will fix her ￡51bn black hole - here's why they won't
Eamonn Holmes tears apart Rachel Reeves' 'broken promise' with brutal six words
Rachel Reeves and one phone call she's dreading - but it's all her fault
Huge update on council tax 'cut' for state pensioners as Treasury responds to campaign
Rachel Reeves skewered by furious GB News star after ￡50bn black hole bombshell
State Pensioners urged to act now to earn up to ￡340
Kemi Badenoch warns Keir Starmer over income tax raid to fill ￡51bn blackhole
Keir Starmer refuses to rule out tax hikes after ￡50bn black hole exposed
Andrew Neil completely savages Rachel Reeves in brutal putdown - 'can't blame Tories now!'
'Act now' warning issued as Rachel Reeves eyes 'targeted moves' on pensions and property
Rachel Reeves accused of Middle England tax raid as she scrambles to avoid disaster
Only one tax will help Rachel Reeves plug her Budget black hole - but it will destroy her
Fury over suggestion state pension age could be increased to 80
POLL: Should Starmer and Reeves resign as they leave UK economy on the brink?
The full breakdown of just how Rachel Reeves has blown a ￡51bn black hole in the economy
Savings allowances explained as Rachel Reeves approves tax crackdown
Bombshell Rachel Reeves report leaves BBC Breakfast viewers raging 'Incompetent!'
Rachel Reeves ridiculed Tories 34 times over ￡22bn blackhole - then made one twice as big
UK 'on the brink' as Rachel Reeves massive mistakes are laid bare in full
Exact date all state pensioners will start paying tax after triple lock change
Rachel Reeves thinks tax hikes will fix her ￡51bn black hole - here's why they won't
Eamonn Holmes tears apart Rachel Reeves' 'broken promise' with brutal six words
Rachel Reeves and one phone call she's dreading - but it's all her fault
Huge update on council tax 'cut' for state pensioners as Treasury responds to campaign
Rachel Reeves skewered by furious GB News star after ￡50bn black hole bombshell
State Pensioners urged to act now to earn up to ￡340
Ben Ramanauskas, a senior research fellow in economics at Policy Exchange, said: “It is deeply unfair for the Government to take even more of their hard-earned money in taxes, especially when many people are struggling to make ends meet.
"The Chancellor needs to get a grip on the public finances by slashing wasteful spending so that it can cut taxes for hard-working people. It should start by finally unfreezing income tax thresholds.”
Reform UK deputy leader Richard Tice doubled down on his party’s pledge to radically increase the point at which income tax must be paid.
Sponsored
Dental Implants | Search Ads |
Read More
Here's What a Dental Implant Might Cost You in 2025 (See Price List)
Undo
He said: “Labour will use every lever to tax Brits more, stunting economic growth and making us poorer as they waste our money. Only Reform UK will make work pay by raising the income tax threshold to ￡20,000 in our costed plan, lifting millions of the lowest-paid workers out of tax, helping people back into work and stimulating productivity in this country.”
Read more: Pensioners may have to budget extra ￡15,000 in savings for 'stealth' tax
Read more: Keir Starmer warned he risks 'another winter fuel crisis' over tax thresholds
The National Institute of Economic and Social Research – which identified the scale of the looming black hole in the national finances – has warned keeping thresholds frozen would raise “much less” than in recent years. It says the freeze resulted in an estimated ￡10.1billion boost to tax revenues in 2024-25 but is likely to raise “only an additional ￡5.8billion by 2029-30” due to slowing wage growth.
The economic watchdog added that extending the freeze “would particularly affect poorer households and is at odds with the Government’s manifesto pledge not to raise taxes on working people and with its mission of boosting living standards in every part of the United Kingdom”.
According to the House of Commons Library, between 2020-21 and 2025-26, “the numbers of individuals of state pension age paying income tax are forecast to rise from 6.47million to 8.72million”.
Tom Clougherty, of the Institute of Economic Affairs, warned the freeze means “more people end up paying higher rates of tax without becoming any richer in real terms”. He expects it “to continue with no end in sight”.
He added: “But we shouldn’t fool ourselves – this is having a real impact on the spending power of ordinary families.”
DON'T MISS
Powered by
Fury over suggestion state pension age could be increased to 80
POLL: Should Starmer and Reeves resign as they leave UK economy on the brink?
The full breakdown of just how Rachel Reeves has blown a ￡51bn black hole in the economy
Savings allowances explained as Rachel Reeves approves tax crackdown
Bombshell Rachel Reeves report leaves BBC Breakfast viewers raging 'Incompetent!'
Rachel Reeves ridiculed Tories 34 times over ￡22bn blackhole - then made one twice as big
UK 'on the brink' as Rachel Reeves massive mistakes are laid bare in full
Exact date all state pensioners will start paying tax after triple lock change
Rachel Reeves thinks tax hikes will fix her ￡51bn black hole - here's why they won't
Eamonn Holmes tears apart Rachel Reeves' 'broken promise' with brutal six words
Rachel Reeves and one phone call she's dreading - but it's all her fault
Huge update on council tax 'cut' for state pensioners as Treasury responds to campaign
Rachel Reeves skewered by furious GB News star after ￡50bn black hole bombshell
State Pensioners urged to act now to earn up to ￡340
Cesar Millan Reveals What Honey Does to Your Aging DogDr. Marty |
Undo
Kemi Badenoch warns Keir Starmer over income tax raid to fill ￡51bn blackhole
Keir Starmer refuses to rule out tax hikes after ￡50bn black hole exposed
People in Ashburn are Loving Martha Stewart's Meal KitMarley Spoon |
Undo
Andrew Neil completely savages Rachel Reeves in brutal putdown - 'can't blame Tories now!'
'Act now' warning issued as Rachel Reeves eyes 'targeted moves' on pensions and property
Jodie Foster Steps Out With Wife & You Will Easily Recognize Her.PemPlay |
Undo
Rachel Reeves accused of Middle England tax raid as she scrambles to avoid disaster
Only one tax will help Rachel Reeves plug her Budget black hole - but it will destroy her
Meet The Wife Of Ron Howard - Try Not To GagGamesWaka |
Undo
Fury over suggestion state pension age could be increased to 80
POLL: Should Starmer and Reeves resign as they leave UK economy on the brink?
Keep Your Mind Sharp With SudokuClassic Sudoku |
Download
Undo
The full breakdown of just how Rachel Reeves has blown a ￡51bn black hole in the economy
Savings allowances explained as Rachel Reeves approves tax crackdown
Seniors Born 1941-1979 Receive 55 Benefits This Month if They AskWalletJump |
Learn More
Undo
Bombshell Rachel Reeves report leaves BBC Breakfast viewers raging 'Incompetent!'
Rachel Reeves ridiculed Tories 34 times over ￡22bn blackhole - then made one twice as big
5-Min Quiz: What Does Your Body Actually Need To Lose Weight?Noom |
Go To Quiz
Undo
UK 'on the brink' as Rachel Reeves massive mistakes are laid bare in full
Exact date all state pensioners will start paying tax after triple lock change
Maximize Your Money: Compare High-Yield AccountsNerdWallet |
Learn More
Undo
Rachel Reeves thinks tax hikes will fix her ￡51bn black hole - here's why they won't
Eamonn Holmes tears apart Rachel Reeves' 'broken promise' with brutal six words
THIS 5 Min Quiz Tells You What Your Body Actually Needs To Lose WeightNoom |
Learn More
Undo
Rachel Reeves and one phone call she's dreading - but it's all her fault
Huge update on council tax 'cut' for state pensioners as Treasury responds to campaign
Taylor Swift Shows Off Her Perfect Figure In New Vacation Photos.Foodie Friend |
Undo
Rachel Reeves skewered by furious GB News star after ￡50bn black hole bombshell
State Pensioners urged to act now to earn up to ￡340
Kemi Badenoch warns Keir Starmer over income tax raid to fill ￡51bn blackhole
Keir Starmer refuses to rule out tax hikes after ￡50bn black hole exposed
Andrew Neil completely savages Rachel Reeves in brutal putdown - 'can't blame Tories now!'
'Act now' warning issued as Rachel Reeves eyes 'targeted moves' on pensions and property
Rachel Reeves accused of Middle England tax raid as she scrambles to avoid disaster
Only one tax will help Rachel Reeves plug her Budget black hole - but it will destroy her
Fury over suggestion state pension age could be increased to 80
POLL: Should Starmer and Reeves resign as they leave UK economy on the brink?
The full breakdown of just how Rachel Reeves has blown a ￡51bn black hole in the economy
Savings allowances explained as Rachel Reeves approves tax crackdown
Bombshell Rachel Reeves report leaves BBC Breakfast viewers raging 'Incompetent!'
Rachel Reeves ridiculed Tories 34 times over ￡22bn blackhole - then made one twice as big
UK 'on the brink' as Rachel Reeves massive mistakes are laid bare in full
Here's The Estimated Cost of a 1-day Gutter Guards InstallationHomeBuddy
Undo
Sponsored LinksSponsored Links
Dexcom G7 is proven to lower A1C and increase time in range3？？.Dexcom
Undo
Sponsored LinksSponsored Links
Emma & Mia Are Retiring — Their Handmade Jewelry Is 80% OffThe Maker's Ledger
Undo
Sponsored LinksSponsored Links
Jolie-Pitt Family Shows Support For Shiloh's ChangeDrivepedia
Undo
Sponsored LinksSponsored Links
Maxwell Marlow, of the Adam Smith Institute, said: “With the economy in dire straits and working people at the brunt of it, the British people cannot afford higher taxes to fund the waste and avarice of the state.”
A Treasury spokesman said: “This Government inherited the previous government’s policy of frozen tax thresholds. At the Budget and the Spring Statement, the Chancellor announced that we would not extend that freeze.
“We are also protecting payslips for working people by keeping our promise to not raise the basic, higher or additional rates of income tax, employee National Insurance or VAT. That’s the plan for change - protecting people’s incomes and putting money into people’s pockets.”
Read Next
SUBSCRIBEInvalid email
We use your sign-up to provide content in ways you've consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. Read our Privacy Policy