The cleverest tax rise is the one you never see. Labour has not had to stand up and announce a headline increase in income tax. It does not need to. It simply leaves the thresholds frozen and lets inflation do the dirty work. The personal allowance has been stuck at £12,570 since 2021/22 and is now set to stay frozen all the way to 2030/31.
This is called fiscal drag, and it is the great stealth tax of our age. As wages rise to keep pace with inflation, more and more of your income is dragged into tax, and millions of workers are pulled into higher bands they were never meant to reach. You feel poorer every year even when your pay packet grows, because the taxman is quietly taking a bigger slice.
The Squeeze Is Real, and the Numbers Prove It
By the end of April, 79% of households reported that their cost of living had risen in the previous month, the highest level since late 2022. This is not a feeling. It is the lived reality of British families who watch the same shopping basket cost more every single week.
And the burden keeps growing. From April, the tax rates on dividend income rose by another 2 percentage points, punishing savers, pensioners with modest investments and the small business owners who take their income as dividends. The temporary fuel duty cut is being clawed back in stages, with increases pencilled in for September, December and next March. Every one of these is a hand reaching into your pocket.
Gimmicks Are Not a Strategy
The government's answer to all this is the political equivalent of a magic trick: a temporary VAT cut on theme park and museum tickets over the summer holidays, dressed up as cost-of-living relief. They take pounds off you in frozen thresholds and dividend taxes, then hand back pennies on a day out and expect gratitude.
Meanwhile the economy crawls along at around 1% growth, inflation is forecast to climb back towards 3.5% by the end of the year, and the overall tax burden sits at levels not seen in generations. This is not an accident of circumstance. It is the predictable result of a government that taxes first and thinks later.
What Reform UK Would Do
Reform UK would lift the income tax threshold so that you keep more of what you earn, and we would take the lowest earners out of income tax altogether. We would end the dishonest practice of freezing thresholds and pretending it is not a tax rise. If a government wants to raise your taxes, it should have the honesty to say so out loud.
A low-tax economy is not a luxury. It is the engine of growth, work and aspiration. You cannot tax a country into prosperity, and you cannot keep squeezing working families and small businesses and expect them to carry an ever-heavier load. Britain needs to be a place where effort is rewarded, not penalised. Right now, it is the opposite.