Chancellor Rachel Reeves has received an extra £9.8 billion in the first two months of this tax year from frozen thresholds in breach of Labour’s election pledge not to raise taxes on working people. The Telegraph has more.
Taxpayers paid £153.7 billion in tax and National Insurance in April and May, nearly £10 billion more than £143.9 billion a year earlier. Income tax receipts made up £54.6 billion of this total.
Rachel Reeves extended the freeze on income tax thresholds at the last Budget, despite Labour’s manifesto pledge not to increase taxes on working people.
Sarah Coles, of investment platform AJ Bell, said: “The taxman carved himself a hefty slice of our cash in April and May, devouring £153.7 billion in two months alone thanks to a combination of frozen thresholds and a hike in dividend tax.
“The impact of this horrible stealth tax becomes more evident with each passing year. Every pay rise has pushed millions of people into paying more tax and more at higher rates.”
Coles warned that the “tax pain is far from over” because thresholds are frozen until 2031.
Freezing thresholds leads to fiscal drag, whereby workers are dragged into higher tax bands when their salaries increase.
It is often described as a ‘stealth tax’ because the Government increases its tax revenues without making changes to headline rates.
Nimesh Shah, of accountancy firm Blick Rothenberg, said stealth taxes were a “cash cow” for governments.
“Wage inflation has been pretty solid, dragging workers into higher tax bands without them even knowing,” he explained.
“It’s a horrible way to raise taxes, but is a clever move for the Government.”
Worth reading in full.
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I can remember reading an article by Chris Mounsey (I think his name was) who wrote a blog called the devil’s kitchen. It was a great read and a “swearblog”, but he wrote eloquently and introduced me to the ideas of libertarianism and minarchism.
He wrote a piece around 2002 (IIRC) which had calculated that if Gordon Brown had just continued Ken Clarke’s spending plans and restricted increases to the rate of inflation, by 2002, the budget surplus would enable the government to abolish income tax.
The rot started the day Blair and Brown entered numbers 10 and 11 and as Makerfield showed, millions still bovinely vote for the socialists.
I disagree that Makerfield showed us anything other than how much Starmer is hated and that by making Burnham an MP he will be subject to a leadership challenge. Amazing how many overlook the record breaking turnout.
and its all going to be spaffed on “our guests”
I can’t decide what’s most annoying: the fact they keep trying to deceive us, or the fact they think we’re too stupid to realise what they’re doing.
I also came across a headline that net borrowing is up in April and May over 2025 and previous years (by approximately £10 billion per month). The two figures together would total an extra £15 billion a month being pissed up the wall. Anybody follow government finances closely enough to confirm or counter?
Another £3 billion and she can pay one month’s interest on the £2.9 trillion debt.
Consider that! That extra tax extracted from our pockets isn’t going to be used to fund “Our” (Bang those pans) glorious NHS or help the ubiquitous, poor, disadvantaged, underprivileged hordes – or buy more breakfasts for starving school children, but to line the pockets of foreign (Boo! Hiss!) money lenders.
Since 1997 all the main Parties have made their foreign cronies richer at our expense, making us poorer.
Bring back hanging.
Whatever Reeves says, it is always going to cost us one way or another. She will clarify that she only committed to not raising the personal tax rates.