Autumn Budget 2025: The government will freeze income tax and national insurance contributions (NICs) thresholds for employees and self-employed individuals at their current levels for three more years.
This freeze will apply from April 2028 to April 2031.
According to the government, three‑quarters of the revenue from maintaining income tax and employee and self-employed NICs thresholds is expected to come from the top half of households in 2029‑30.
Additionally, it is also maintaining the per-employee threshold at which employers become liable to pay NI, known as the Secondary Threshold, at £5,000 from April 2028 until April 2031. The government will legislate for this measure in early 2028.
Les Cameron, head of technical at M&G, said: “The most pain will be felt by those whose incomes cross income tax thresholds and their marginal rate increases. Moving up a tax bracket may well see individuals and couples spurred into taking advice on how they can structure their finances more efficiently.”
Christine Cairns, tax partner at PricewaterhouseCoopers (PWC), added: “The reversal of last year’s ‘giveaway’ that there would be no extension to frozen income tax thresholds beyond 2028 means a further five years of fiscal drag, which will continue to hit the public in the pocket. This, compounded by the increase in employers’ national insurance contributions last year, means that nearly a quarter of taxpayers will be paying the higher rate by 2030.”
Paul Robbins, director of tax at Croner-I, added: “The controversial reduced employer NI threshold of £5,000, announced by the Chancellor in last year’s budget, will remain in place until April 2031. This has been unpopular with private businesses and cash-strapped public sector employers alike. This is, of course, bad news for employees, who are facing cost-of-living pressures from rising costs and consistently high inflation; but it’s also bad news for businesses, as it will hit consumer spending power.”
