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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