Should income tax thresholds rise with inflation every year, even if it means less money for public services?
Income tax thresholds in England, Wales and Northern Ireland are frozen: the personal allowance is £12,570 and the higher-rate threshold is £50,270. Both stay at those levels until April 2031, under the extension announced at the November 2025 Budget and legislated in the Finance Act 2026. Before the freezes began in 2021, thresholds normally rose each year with CPI inflation. The OBR estimates the extended freeze raises about £8bn a year by 2029-30 and pulls more people into paying tax.
1 Opinion
Raising bands inline with inflation helps maintain income for the low paid, so should be automatic.