The new tax year began on 6 April and, once again, the Personal Allowance sits unchanged at £12,570. It has been frozen at that level since 2021. Under current plans it will stay frozen until at least 2028. During that same period average wages are rising by around 3.8% a year. The maths is not complicated. Millions more Britons are being pulled into the 20% band, the 40% band, and the 45% additional-rate band every single year — without Parliament ever voting to raise tax rates.
Fiscal Drag Is Not An Accident
Fiscal drag is one of the most dishonest forms of taxation in the modern system. The government does not have to stand up at the despatch box and announce a rate rise. It does not have to face the political cost. It simply leaves the thresholds where they are, waits for inflation and pay rises to do the work, and watches the revenue pour in. The Resolution Foundation has estimated that the combined freezes will raise tens of billions a year by the end of the Parliament. That is a tax rise on every working person in Britain — delivered by stealth.
Labour came to power pledging not to raise income tax, National Insurance or VAT "on working people." They have honoured the letter of that promise and shredded its spirit. The Chancellor is quietly running one of the largest tax-raising operations in recent British history while telling voters she is doing no such thing.
Council Tax, Dividends, And The Quiet Squeeze
It is not just income tax. Most English councils are raising Council Tax bills by the maximum 4.99% permitted without a referendum. From 6 April, dividend tax rates rose by two percentage points across the basic and higher bands — a direct hit on small company directors and anyone drawing income from investments. The modest tax relief for employees working from home has been quietly abolished.
None of this appeared on the front pages. None of it was debated at the general election. It is revenue raised in the margins, where ministers hope nobody is paying attention. And it lands hardest on the people who can least afford it — pensioners on fixed incomes, young families trying to buy a first home, and the self-employed who keep the country running.
Living Standards Going Backwards
Private rents are now 20% higher on average than when housing support was last linked to market rates. The Joseph Rowntree Foundation has warned that weak income growth has left people with "little resilience to shocks." Disposable income for ordinary households is being squeezed on every side. And yet the Treasury continues to benefit from thresholds that refuse to move.
This is not responsible economic management. It is taxing the country into stagnation while boasting about stable headline rates. You cannot grow an economy by quietly drying out the pockets of the workers who power it.
What Reform UK Would Do
Reform UK has been clear on this for years. Raise the Personal Allowance to at least £20,000 and take the lowest-paid out of income tax altogether. Index all tax thresholds to inflation by law, so no future government can use fiscal drag as a hidden revenue tool. Scrap the dividend hike. Rein in council tax increases. And focus spending cuts on the parts of the state that genuinely waste money — not on the working majority who already pay the bill.
British workers are being told to accept smaller pay packets, higher bills, and fewer options, all while being lectured about how well the economy is doing. They are not fools. They see the numbers on the payslip. And they will remember who let the thresholds rot while the cost of living climbed.