Income tax freeze to cost Brits £8bn by 2025
Income tax personal allowance thresholds will be frozen until 2025, costing Brits £8.1bn by 2025-26.
Both the Personal Allowance, and the Basic Rate Limit, will be set at 2021-22 levels for five years.
Whilst the Chancellor said in the Budget that take-home pay would not fall as a result of the measure, the move will drag on Brits’ wallets as pay and inflation increase in the coming years.
The phenomenon is known as fiscal drag.
The policy will cost Brits £1.5bn in 2022-23, £3.6bn in 2023-24, and £5.7bn in 2024-25.
The Chancellor also announced a significant increase in Corporation Tax for the most profitable businesses, alongside a so-called ‘super deduction’ to encourage investment.
Other measures announced include a freeze to beer and fuel duty, a host of freeports and changes to Covid-19 support schemes.
Read more: All you need to know about Budget 2021