The new tax year started on 6 April. The government wants you to believe not very much has changed — after all, the headline income tax rates are the same. That is one of the oldest tricks in the political playbook, and this year it is being performed with particular shamelessness.
Because behind the unchanged rates sits a much uglier reality. The personal allowance is still frozen at £12,570. It has been stuck at that figure since 2021/22. It is now scheduled to stay frozen until at least 2028. That freeze is, in effect, one of the largest tax rises in modern British history — and Labour, which happily inherited it from the last Conservative government, has done absolutely nothing to unfreeze it.
Fiscal Drag Is a Tax Rise by Another Name
Here's how the trick works. Wages rise. Most years, that's a good thing. But if the tax thresholds don't rise with them, more of your pay gets pulled across into higher-rate bands. A full-time worker on a modest salary in 2021 was a basic-rate taxpayer. The same worker today, after five years of inflation-linked pay rises, may well be a 40 per cent higher-rate payer. Nothing about their real standard of living has improved. But HMRC now takes a much bigger slice of every extra pound they earn.
That is what economists politely call "fiscal drag". Everyone else calls it a tax rise by the back door. Labour didn't need to break its manifesto promise not to raise income tax rates, because the Conservatives had already done the heavy lifting by freezing the thresholds. Ed Miliband couldn't have scripted it better.
The Working-From-Home Relief Is Gone
Then there are the smaller, quieter raids. From 6 April 2026, the income-tax relief for employees who work from home and aren't reimbursed by their employer has been scrapped. Until this month, workers could claim a flat-rate deduction of £6 per week without receipts — saving a basic-rate taxpayer about £62 a year. Not a fortune. But for a family already squeezed by rising rents and energy bills, every £62 matters.
£62 here. A few hundred there. A higher-rate band creeping up to catch another bit of your overtime. That is how this government, like the one before it, is actually funded: not by big, visible tax rises that voters can punish at the ballot box, but by a thousand little cuts that each seem too small to make a fuss about.
The National Living Wage Rise That Is Quickly Taxed Back
The government will tell you the National Living Wage has risen to £12.71 per hour for workers aged 21 and over — a 4.1 per cent increase. Welcome, of course. But the frozen personal allowance means that much of that rise is taxed straight back. A full-time worker earning roughly £26,400 in 2026 is being taxed on a larger share of their income than the same person was in 2021, even though their real spending power is barely different.
Meanwhile the Resolution Foundation calls April 2026 "the high point of the decade" — not because it's good, but because projected incomes are expected to fall by £580 over the next three years. Welcome to Britain under Labour: rising headline wages, falling real incomes, and a creeping tax burden on every working household.
What Reform UK Would Do
Reform UK would raise the personal allowance to at least £20,000. That single change would lift millions of low earners out of income tax altogether. It would give back to working families money that should never have been taken from them in the first place. We would index tax thresholds to inflation so that governments of all colours can't pull this stealth-tax trick again. And we would hold the line on the small reliefs that help ordinary people, rather than salami-slicing them away to balance a spreadsheet in the Treasury.
Labour insists it has stood up for working people. The frozen personal allowance says otherwise. The scrapped work-from-home relief says otherwise. Your payslip says otherwise. A government that is quietly taking more of your money every year while insisting it isn't raising taxes is not on your side. It's on its own.