Chancellor Rachel Reeves presented the Spring Statement in the House of Commons today, addressing whether there would be significant tax adjustments.
Currently, personal tax thresholds will remain frozen until the conclusion of the 2030/31 fiscal year. Originally scheduled to unfreeze in April 2028, the Chancellor extended this freeze by an additional three years during her Budget announcement last November.
Upon the initial announcement, the Office for Budget Responsibility predicted that the freeze would lead to an increase of 780,000 basic-rate, 920,000 higher-rate, and 4,000 additional-rate income tax payers in 2029/30.
Reeves did not introduce any new tax threshold changes in today’s Spring Statement, confirming that the thresholds will continue to be frozen until the end of the 2030/31 tax year.
The freezing of tax brackets, known as fiscal drag, gradually pushes more individuals into higher tax brackets as their incomes rise. It is also considered a stealth tax, enabling the government to collect more taxes without raising tax rates.
The current personal allowance stands at £12,570, marking the threshold before individuals begin paying income tax. Earnings exceeding this amount are subject to the basic 20% income tax rate, with the higher 40% rate applicable on incomes surpassing £50,270 and the additional 45% rate triggered beyond £125,140.
Moreover, the National Insurance payment threshold is also set at £12,570. Individuals contribute 8% in National Insurance when earnings reach this level, followed by a 2% contribution on earnings exceeding £50,270.
