The Vanishing Pay Rise
The tax risenobody voted for.
Income tax thresholds have been frozen since April 2022 and are due to stay frozen until April 2031. As pay rises, more of it is pulled into tax, and into higher bands, without a single rate going up. That is fiscal drag. Set your salary and see what the freeze takes from you this year.
Figures checked 27 Sep 2026Income tax, 2026/27 · England, Wales and Northern IrelandSources
See it
Income tax now
On today's frozen thresholds.
If thresholds had kept up with prices
Uprated each April by CPI, as the law sets by default.
Of your next £1,000 pay rise
goes in income tax now.
Frozen, 2026/27
Risen with prices
| Threshold, 2026/27 | Frozen | Risen with prices | Gap |
|---|---|---|---|
| Personal allowance | £12,570 | £16,080 | £3,510 |
| Higher rate starts | £50,270 | £64,480 | £14,210 |
Understand it
By law, the tax-free personal allowance and the basic-rate band rise each April with inflation, so a pay rise that only keeps pace with prices does not cost you more tax. Chancellors can override that default, and since April 2022 they have. The thresholds stand still while pay moves, so each year a little more of every pay packet is taxed and more people cross into the 40% band. No rate goes up, so it rarely makes the news.
The Office for Budget Responsibility expects the freeze to bring 6.1 million more people into income tax by 2030/31, 4.8 million more into the higher rate and 600,000 more into the additional rate, raising over £55bn in that year. It was set by one party and extended by the other. It is the argument in one payslip: an outcome you feel every month, decided by policy.
The decisions, in order
- 2021Freeze announced from April 2022 to 2026.
- 2022Extended to April 2028.
- 2023The 45p rate starts lower, at £125,140, down from £150,000.
- 2025Extended again, to April 2031.
Fix it
Unfreeze and index the thresholds
Re-link the personal allowance and the higher-rate threshold to inflation, so a raise that only tracks prices never costs you more tax.
The trade-off
Gives up the £55bn a year the freeze is forecast to raise by 2030/31, which would have to be found elsewhere.
Make uprating the rule, with a vote to stop it
Keep inflation uprating as the default and require a separate Commons vote, every year, to freeze any threshold.
The trade-off
Removes a quiet lever chancellors use to balance the books without announcing a rise.
Put the drag on the Budget's front page
Require every Budget to publish, in pounds per household, what frozen thresholds raise that year, next to the rates.
The trade-off
Transparency only. It names and prices the drag; on its own it does not reverse it.
Sources and method
- GOV.UK · Income Tax rates and Personal Allowances and Income over £100,000: 2026/27 personal allowance £12,570, basic-rate band £37,700, 45p rate on taxable income over £125,140, and the allowance withdrawn by £1 for every £2 over £100,000.
- House of Commons Library · Fiscal drag: an explainer (CBP-9687, 7 April 2026), using OBR March 2026 forecasts: frozen until April 2031; 6.1m more income tax payers, 4.8m more higher-rate and 0.6m more additional-rate payers, and over £55bn raised in 2030/31.
- ONS · CPI annual rate (series D7G7): September 2021 3.1%, 2022 10.1%, 2023 6.7%, 2024 1.7%, 2025 3.8%.
"Risen with prices" uprates the 2021/22 thresholds each April by the previous September's CPI, the statutory default, rounding the allowance up to the next £10 and the basic-rate band up to the next £100 as HMRC does. That gives a 2026/27 allowance of £16,080 and a basic-rate band of £48,400, so the higher rate would start at £64,480. The £100,000 taper and the £125,140 limit for the 45p rate are kept as they are in both columns, so the gap shown comes from the freeze alone. Income tax only: National Insurance thresholds are frozen too and are not included. Scotland sets its own bands. The calculation assumes a salary with no other income or reliefs.