Stealth taxes were a big theme in today’s Autumn Statement.
These involve freezing the thresholds at which people start paying different rates of tax. Because of inflation and pay increases, the proportion of earnings that we pay tax on will increase, and more people will move into higher tax brackets.
Taxes included in the announcement are income tax, national insurance and inheritance tax.
When Rishi Sunak was Chancellor, he introduced a four-year freeze on tax thresholds. Under the plan, the personal allowance – the level above which workers start paying income tax was frozen at £12,570 from April 2022 until 2025-26.
The threshold for higher-rate income tax – when workers start paying 40% instead of the standard 20% rate was frozen at £50,270 up to April 2026. The inheritance tax threshold was also frozen at £325,000 until April 2026.
The current Chancellor Jeremy Hunt announced that the threshold freezes as described above will apply for a further two years, which would mean millions will be paying increased amounts in tax through to April 2028.