Nearly 1 Million Britons to Pay Higher Tax Due to Frozen Thresholds

New analysis by the Taxpayers' Alliance reveals that nearly one million people in the UK will be pushed into higher income tax bands this year due to the government's freeze on tax thresholds, a phenomenon known as fiscal drag or 'stealth tax'. Specifically, 500,000 more people will pay the basic 20% rate, 410,000 will enter the 40% higher rate, and 70,000 will be subject to the 45% additional rate. The number of additional rate taxpayers has quintupled. On average, Britons will pay £640 more in income tax compared to the 2025 financial year and £1,040 more than in 2024. The freeze, extended by former Chancellor Rachel Reeves until April 2031, aims to increase fiscal headroom. Prime Minister Andy Burnham has indicated he may review the £12,571 personal allowance at the upcoming Budget, though his spokesman denied immediate plans for a tax cut. Shadow Chancellor Sir Mel Stride warned that Burnham is heading toward further tax increases, citing unfunded pledges on defence, energy, and public sector pay.