Business Maverick: Liz Truss’s tax cuts set to cost millions of workers more

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Millions more Britons will be dragged into higher rates of income tax over the next three years, costing twice as much as Prime Minister Liz Truss’s personal tax cuts, according to calculations by the Institute for Fiscal Studies.

While the government is reducing the basic rate of income tax, it currently plans to maintain the freeze on thresholds where people start paying up to the fiscal year 2025-26. That will push people into higher tax brackets, forcing them to pay more.

Those earning between £12,571 and £50,720 will see the headline tax rate fall to 19% to 20%, and an increase in national insurance contributions is being reversed. But freezing the level at which tax is paid will have a bigger impact on the earnings of many people, the research group said. Overall, “for every £1 given to households through headline cuts to taxes, £2 is being taken away in stealthy freezes”, the IFS said in a report on Thursday.

 

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