Extending the income tax threshold freeze could lead to higher tax rates for a million Britons. The freeze, which has been in place since 2022, is set to end in 2028, but extending it to 2030 could generate an additional £10bn for the Treasury, according to the Institute for Fiscal Studies (IFS). By 2028, an estimated 3.5m more people will fall into the higher-rate tax band. IFS director Helen Miller has told BBC Radio 4's Today programme that extending the freeze "absolutely would" be a tax on "working people," highlighting a lack of transparency in such a measure. Rachel Reeves, the Chancellor, affirmed her commitment to not extending the freeze beyond 2028/29 during her Budget, saying that "it would take more money out of their payslips." She added: "I am keeping every single promise on tax that I made in our manifesto. There will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions by the previous government." With Sir Keir Starmer this week promising to adhere to manifesto commitments and the Government's fiscal rules, a Conservative spokesman said that while the Prime Minister "emphatically ruled out any rises in income tax, NI or VAT ... he wouldn't repeat the promise his Chancellor made in the autumn to lift the freeze on income tax thresholds."
