Skip to content
Home » News » The chancellor is gaining tax revenue by freezing income tax thresholds

The chancellor is gaining tax revenue by freezing income tax thresholds

Over time, earnings usually rise and people move up the career ladder. As they do so, they move into higher tax brackets, paying higher income tax rates. 

Rishi Sunak last year said he would freeze the thresholds for higher rate tax, as well as the starter threshold of £12,570, which applies across the UK. That can a be a stealthy way of raising tax revenue.

But with high inflation and more people moving into the higher brackets, it is much less stealthy and much more of a tax grab. By the next Westminster election, the impact of that is expected to be worth £17bn a year.

That is one of the main reasons why the public finances in the spring statement are looking relatively strong.

The Scottish government has frozen those thresholds for longer. It hasn’t said it will keep them frozen, as Mr Sunak has said, but the Holyrood administration is doing so on higher rate tax into 2022-23.