ONE MILLION WORKERS FACE HIGHER TAX RATE – UK Government to push a million earners into higher tax bands as thresholds stay frozen
Around one million additional workers are set to be pulled into the higher 40% income tax bracket as the government maintains its freeze on tax thresholds. The Office for Budget Responsibility says the freeze means wage growth is pushing ordinary earners into tax bands originally designed for top-income workers.
Critics have labelled the policy a “stealth tax,” arguing it places growing pressure on middle-income families already dealing with inflation and high living costs. However, Chancellor Rachel Reeves has defended the approach, insisting that stabilising the public finances requires tough decisions while still safeguarding key services.
Economists warn the policy could become one of the largest long-term revenue raisers in decades, costing lower-paid workers thousands over time.
Opposition parties have accused the government of choosing to squeeze households rather than reform spending across Whitehall departments and Unions, business groups with taxpayer advocates are urging the Chancellor to provide clarity on whether the freeze will continue in the coming years.
Chancellor Rachel Reeves has confirmed she will scrap the two-child benefit cap, marking one of the most significant welfare reversals in more than a decade.
The two-child welfare cap, introduced by the Conservative government in 2017, means many low-income families do not receive further benefits when they have a third child or subsequent children.
