Income Tax: Tax Rates and Bands
(asked on 31st January 2025) - View Source
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, pursuant to the Answer of 13 December 2024 to Question 18292 on Income Tax: Tax Rates and Bands, what estimate she has made of additional tax revenue raised by freezing the (a) standard and (b) higher rate income tax thresholds (i) for each financial year and (ii) in total to 2029-30.
The Office for Budget Responsibility (OBR) routinely publish this information in their Economic and Fiscal Outlooks (EFO).
The table below is extracted from the OBR’s most recent EFO, from October 2024 (Table 3.9, available here: https://obr.uk/economic-and-fiscal-outlooks/). This shows the per annum reduction in government borrowing arising from the freeze in both the Personal Allowance and the Higher Rate Threshold up to 2027-28. From 2023-24 to 2029-30, these measures raise a total of £207.9bn.
| £ billion | ||||||
| Forecast | ||||||
| 2023-24 | 2024-25 | 2025-26 | 2026-27 | 2027-28 | 2028-29 | 2029-30 |
PA and HRT freezes | -13.2 | -23.3 | -27.6 | -31.8 | -36.0 | -37.5 | -38.6 |
The current Government is committed to keeping taxes for working people as low as possible while ensuring fiscal responsibility and so, at our first Budget, we decided not to extend the freeze on personal tax thresholds. As a result, they will rise with inflation from April 2028, meaning working people will keep more of their earnings.