Nine Million Face Higher Tax Bands By 2030

Introduction

According to forecasts drawing on official data, an estimated nine million people across the UK could be moved into higher income tax bands by 2030 as a result of the ongoing freeze on personal tax thresholds.

The measure, which has been maintained by successive Conservative and Labour governments, has attracted criticism amid concerns over its potential effect on household finances, disposable income, and perceptions of indirect taxation.

These findings are based on recent analysis incorporating figures from the Office for Budget Responsibility (OBR) and House of Commons Library.

Overview of Rising Tax Burden

The freeze on personal income tax thresholds has led to an increasing number of individuals becoming subject to higher tax rates as wages rise. According to the OBR’s March 2025 forecast, 7.7 million people were already expected to move into higher tax bands by 2029-30 if the threshold freeze, introduced in 2021, continues as planned until April 2028.

An additional proposal to extend the freeze by a further two years to April 2030 would result in approximately 1.3 million more people entering higher tax bands. This would bring the total affected by the measure to around nine million by the end of the decade.

Tax Threshold Freeze: Background and Timeline

The initial policy to freeze income tax thresholds was implemented in 2021 as part of efforts to increase government revenue without raising headline tax rates.

The basic personal allowance and higher-rate threshold were originally to remain fixed until April 2026. Subsequent decisions extended the freeze to 2028, and, at the time of reporting, further extension to 2030 is under consideration.

Critics contend that the policy constitutes a form of “fiscal drag”, whereby rising earnings push taxpayers into higher bands, generating more revenue for the Treasury without explicit rate increases.

Projections and Demographic Impact

Based on combined projections from the OBR and the House of Commons Library, 4.9 million additional individuals are expected to move into the basic rate band and 4.2 million into the higher rate band by 2029-30 compared to the position without the freeze.

This shift will affect a broad range of earners, including middle-income households, and could place further financial pressure on families already facing cost-of-living challenges.

Political Debate and Policy Positions

The freeze has been the subject of considerable political debate. In 2023, senior Labour figures criticised the Conservative government’s approach, describing it as effectively increasing the tax burden on working families through indirect means.

However, Labour has since indicated that it would support the continuation of the policy if in government. With the budget announcement scheduled for Wednesday, the debate over extending the freeze remains active in Parliament and beyond.

Financial Implications for the Public

Official analysis suggests that the total annual impact of these threshold freezes and extensions would be approximately £55.9 billion by 2029-30, with £48.9 billion attributed to Conservative-led freezes and £7 billion linked to planned further extensions.

These figures represent net increases in personal tax receipts, encompassing both income tax and national insurance. Many observers note that this growing tax revenue comes at a time when living costs remain elevated and wage growth is modest.