Summary
The chancellor's decision to freeze tax thresholds means people in the UK will pay more in taxes as their incomes rise. This affects income tax and National Insurance Contributions, with many people entering higher tax brackets over time. The policy aims to raise significant funds by 2031, impacting most taxpayers.
Key Facts
- Tax thresholds in the UK will remain frozen for three more years.
- A tax threshold is the income level at which you start paying a certain rate of tax.
- Freezing the thresholds means as incomes grow, more income becomes taxable at higher rates.
- About a million people could start paying income tax due to this change.
- Part-time workers and state pensioners may now pay income tax as their incomes reach the threshold.
- National Insurance thresholds are also frozen, affecting how much people pay.
- The policy expects to pull in £56 billion by 2031, with £12 billion from the latest extension.
- By 2030, over five million more people may need to pay taxes due to the freeze in thresholds.
