Income tax thresholds will remain frozen for three more years, continuing a policy that significantly impacts UK income tax thresholds and worker take-home pay across the country. According to documents released by the Office for Budget Responsibility (OBR) and reported by the BBC, the policy is scheduled to continue until it is expected to start rising again after 2031.
The personal allowance—the point at which individuals begin paying tax—alongside other thresholds where higher rates apply, has been frozen at 2021 levels. Successive chancellors from Rishi Sunak onwards have utilized this mechanism to raise additional revenue for public services such as the NHS, defence, schools, and support for the vulnerable. The OBR indicates that the extra revenue generated by freezing these tax thresholds is projected to reach £58bn by 2030-31.
Impact on UK Income Tax Thresholds and Taxpayers
Because thresholds are not rising with inflation while wages typically increase, a larger proportion of earnings becomes subject to taxation. This approach is frequently described as a stealth tax because it increases the tax burden without altering headline rates on a payslip. OBR calculations show that by 2031, an extra 6.8 million people will be paying tax who otherwise would not have if the personal allowance had remained linked to inflation.
Furthermore, frozen thresholds mean more individuals are pulled into higher tax brackets as their nominal incomes grow. The OBR estimates that an additional 5.4 million people will become higher-rate taxpayers by 2031. For instance, individuals earning just under the £50,271 threshold who receive a pay rise will find portions of their income taxed at the 40% higher rate. By 2031, nearly one in four taxpayers is expected to pay some tax at the higher rate.
Pensioner Protections and Future Outlook
With the basic state pension rising to £13,036, pensioners risked being drawn into paying income tax because the standard personal allowance sits at £12,570. To address this, the chancellor is introducing a separate Pension Tax Allowance to ensure low-income pensioners with income up to the value of the full new state pension will not pay income tax.
National Insurance Contributions are also levied according to these same thresholds. While the policy will persist for several more years, OBR documents show that once the freeze concludes after 2031, thresholds are scheduled to rise with inflation again, allowing workers to keep a larger share of their earnings.
Source: The one thing that didn't change that will affect your pay the most (source-feed timestamp 2026-10-28T15:48:03+00:00). AI-assisted report based on the cited linked article and its RSS feed; details were not independently verified.
Related coverage
Context matters. Read about our editorial standards and corrections policy.
Join the conversation