Welcome to tax year 2026/27. Welcome to stealth taxes. Labour promised to cut working people a break. Instead, they're breaking working people.

From today, 300,000 people lose their home working allowance. No more £62 relief for basic rate taxpayers. No more £124 for higher rate. Gone. Just like that. A working mum in Croydon who runs a small side business? Taxed. A dad who works from home some days? Taxed. Direct hit to household incomes.

The Frozen Thresholds Trap

But that's just the opening move. The real killer is fiscal drag. The personal allowance is frozen at £12,570. It's been frozen since 2021/22. It will stay frozen until at least 2028.

What does that mean? Every year, inflation pushes wages up. Every year, more workers slip into higher tax brackets. Nobody's raising tax rates. Nobody's announcing new levies. But millions are suddenly paying more tax anyway. That's fiscal drag. That's stealth taxation at its most effective.

By 2028, thanks to this frozen threshold policy, around 3.8 million more people will be in the basic rate band or higher. Some will hit the 40% bracket who never dreamed they would. A teacher earning £45,000? Paying higher rate tax. A nurse? Same story.

Dividends Hit Again

Then there's the dividend tax rise. Dividend tax allowance cut from £500 to £250. And the rates themselves are up by 2 percentage points across the board. Basic rate goes from 8.75% to 10.75%. Higher rate from 33.75% to 35.75%.

That targets small business owners. Family firms. Self-employed people who've taken risks and built something. This government says it's about fairness. It's about squeezing whoever they think won't fight back hard enough.

Making Tax Digital: Another Compliance Burden

From today, every sole trader earning over £50,000 must use Making Tax Digital. More record-keeping. More compliance. More cost. More friction for the people trying to run small businesses and keep Britain working.

This isn't modernisation. This is government making life harder for entrepreneurs. Every hour spent filing records digitally is an hour not spent growing a business, employing people, or serving customers.

Growth Downgraded, Energy Bills Rising

And while working people tighten their belts? The economy is weakening. The OBR's latest forecast cuts growth from 1.9% to 1.4%. We're not storming ahead. We're slowing down. Stagflation in slow motion.

Yes, the energy price cap falls 7% today. But gas prices are doubling across the market. That relief won't last through the winter. Working families still face an energy crisis. Only now they'll face it with less take-home pay and fewer tax breaks.

What Reform UK Would Do

Reform UK believes in cutting taxes for people who work. We'd raise the personal allowance to at least £20,000 — index it to inflation — and keep it moving. We'd scrap the dividend tax hikes and let entrepreneurs reinvest. We'd bin Making Tax Digital for small firms under a sensible threshold. Lower tax burden. Simpler rules. Growth through incentive, not regulation.

This government has chosen a different path. Higher stealth taxes. More compliance burden. Slower growth. That's not a plan for working Britain. That's a plan to make working harder every year.