High earners could pay £4,000 more tax a year without any real boost to their purchasing power if Chancellor Rachel Reeves extends the current income tax threshold freeze until 2030.
Rathbones, the wealth management firm, estimates that someone earning £100,000 by April 2025 would face an extra tax burden of £4,043, compared with £2,517 if the freeze ends in April 2028.
The freeze on tax thresholds, combined with rising wages, is pulling more people into higher tax bands – a phenomenon known as fiscal drag. If extended, higher earners could pay over £7,000 in additional income tax over the period since thresholds were first frozen in April 2021.
With an income tax hike ruled out, extending the freeze on thresholds could be the government’s main lever to plug the multi-billion-pound fiscal gap.
According to Rathbones: “People will feel the impact of these tax rises straight away. A bigger slice of any pay rise is lost to tax, which could discourage promotions or overtime.”
| Salary in 2024-25 | Extra tax burden by April 2028 | Extra tax burden by April 2030 |
| £35,000 | £242 | £353 |
| £50,000 | £842 | £1,438 |
| £80,000 | £1,210 | £1,766 |
| £100,000 | £2,517 | £4,043 |
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