Fresh analysis indicates that the Chancellor’s decision to extend the freeze on income tax thresholds will hit middle earners harder than those on the highest salaries. Rather than concentrating the burden on the wealthy, the policy is expected to lead to larger cash increases in tax bills for people on moderate incomes, calling into question claims that the richest will pay the most.
Figures show that someone earning £48,000 a year is projected to pay an additional £603.50 in income tax by 2031, when the freeze is due to expire. In contrast, an individual on £150,000 annually would see their bill rise by just £393.59 over the same period. This reflects the effect of fiscal drag, where frozen thresholds pull rising wages into higher tax bands, increasing liabilities unevenly across income groups.
The research was carried out by the Institute for Fiscal Studies (IFS), which found that workers in roles such as police officers, experienced teachers and nurses are among the most exposed. These professions often fall within the income brackets most sensitive to threshold freezes. As pay increases with inflation, more of their earnings become taxable at higher rates, leading to steeper cash rises in tax than for those at the very top of the income scale.
This sits awkwardly alongside repeated statements from Chancellor Rachel Reeves that the Government’s tax approach is designed to ensure those with the “broadest shoulders” contribute the most. The IFS identified the threshold freeze as the largest single revenue-raising policy in the latest Budget, suggesting it plays a central role in funding public spending plans.
The move has prompted criticism from the Opposition. Shadow Chancellor Sir Mel Stride argued the policy contradicts the Government’s rhetoric on fairness. He said that despite promises that the wealthiest would bear the biggest burden, the main tax rise in the Budget is a “stealth tax” that falls primarily on middle-income workers. Sir Mel described the decision as political rather than unavoidable, claiming it effectively takes money from pay packets to finance increased public expenditure, including higher welfare costs. He also accused the Chancellor of portraying herself as pro-worker while imposing heavier taxes on them.
The IFS examined the impact across the full range of earnings. By the end of the freeze, someone on £46,000 a year is expected to face an extra £410.46 annually in tax. Lower-paid workers are also affected: a person earning £12,000 could pay around £220.15 more, a rise that represents a larger share of their income than for better-paid employees.
The Treasury has defended the policy using its own distributional analysis, which argues the top ten per cent of households will contribute the most once all tax and spending changes are included, such as a proposed mansion tax. However, the IFS maintains that frozen thresholds steadily pull more people into higher tax bands.
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