Stories

Wed, 28 Oct 2026

Wed, 28 Oct 2026 Tax thresholds remain unchanged - here's what it means for your pay

The point at which you start to pay tax, and the point where you tip into paying a higher rate of tax have been frozen for three more years.

* After that, they are expected to rise again with inflation, allowing people to keep more of their earnings.
* The freeze has shaved additional tax off people's take-home pay for the past five years.
* By 2031, an extra 6.8 million people will be paying tax who wouldn't have if the personal allowance had not been frozen.
* The state pension is currently just below the personal allowance threshold, and pensioners may be drawn into paying tax from next April unless a new separate Pension Tax Allowance is introduced.
* National Insurance Contributions (Nics) are levied according to the same thresholds.
* If the personal allowance had risen with inflation over the last five years, people could now take home £16,070 of their salary without paying income tax.
* The freeze on thresholds means more and more people are being dragged into the higher, 40%, tax bracket - an extra 5.4 million by 2031.
* Almost one in four taxpayers will pay some of their tax at the higher rate by 2031.
* If Healey had unfrozen the personal allowance this week, basic rate taxpayers would have saved up to £198 in tax a year, while higher rate taxpayers would save £395.