The Office for Budget Responsibility has highlighted the impact of frozen tax thresholds, predicting that by 2025/26 an additional 1.3 million people will be caught in the tax net and a million more will move into a higher tax bracket.
Moreover, to extract the same amount of tax from this individual, the basic tax rate would need to be set at 27.7 per cent – a significant leap from the 'official' rate of 20 per cent.
Plan to raise personal tax allowance from £12,570 to £20,000 - huge update A push to hike the income tax personal allowance from £12,570 up to a £20,000 has just cleared a crucial milestone.
If we apply the same assumptions as before regarding inflation, wage increases and the frozen Personal Tax Allowance, a 'typical' person in the lowest decile would see their tax bill rise from £1,624 to £2,906.".
"This equates to an increase in the average tax rate from 7.8 per cent to 10.7 per cent, a hike of 37.7 per cent.
