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Autumn Budget 2024: Chancellor of the Exchequer, Rachel Reeves, has announced that income tax thresholds will remain frozen until 2028.
Reeves, the UK’s first female Chancellor, announced in her Autumn Budget to the House of Commons that the government will not be increasing the basic, higher or additional rates of income tax, national insurance contributions (NICs) or VAT.
From April 2028, personal income tax and NIC thresholds will be uprated in line with inflation.
Steven Cameron, pensions director at Aegon, said: “The Chancellor has held the previous government’s freeze on income tax thresholds until 2028 but has signalled she will then ‘Let it Go’ to rise in line with inflation, as happened before 2022.
“This freeze, often referred to as a stealth tax, means that the thresholds for paying basic and higher rates of income tax will remain unchanged at their 2022 levels, rather than the previous convention of increasing each year in line with inflation. When people get a pay rise, they can move from below to above a threshold, leading them to pay a higher rate of income tax ‘by stealth’.
“For those moving into the higher-rate tax bracket, one thing to consider is whether [they] can afford to pay the extra over the higher-rate threshold as a pension contribution. Doing so will mean [they] benefit from a higher rate of pensions tax relief at 40%.”
