Rachel Reeves has insisted she does not deny the impact on “ordinary” people after unleashing £26billion worth of tax hikes in her much-anticipated Autumn Budget, but argued the changes are “fair” and “necessary”.
Pension savers are again among those hit, with changes to salary sacrifice schemes expected to raise significant revenue. Industry experts warn that the move will fall hardest on the take-home pay of “ordinary workers” rather than the wealthiest.
The Chancellor continues to face accusations of breaking Labour’s election pledge not to raise taxes on working people, after choosing to freeze income tax thresholds until 2030/31.
The prolonged freeze will push an estimated 780,000 more people into the basic-rate, 920,000 more into the higher-rate, and 4,000 more into the additional-rate band by 2029/30 as earnings rise over time. Scotland has a separate income tax system. In the rest of the UK, people must pay 20% income tax if their earnings exceed £12,570, with the 40% rate applying from £50,271 and the 45% band from £125,140.
State pensioners have been urged to brace for an increased income tax burden. The triple lock increases will bring the full new state pension to £241.30 a week, or £12,547.60 a year, representing an increase of almost £575 a year.
With thresholds frozen, that rise will leave those on the full new state pension State Pension just £20 below the annual personal allowance threshold of £12,570, inching many closer to paying income tax for the first time.
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