Fiscal Drag

UK income tax threshold freeze, 2022 to 2031

Frozen bands. Bigger tax bill.

Since April 2022 the tax-free allowance has been stuck at £12,570 and the 40% threshold at £50,270. Prices have risen by about a quarter. See what fiscal drag has cost you.

  • Tax-free allowance £12,570would be£16,080
  • 40% rate starts at £50,270would be£64,480
  • Since September 2021 prices+24%thresholds+0%

Your numbers

Gross annual pay before tax, in pounds.

Salary by tax year

We fill these from your current salary. Change any year your pay was different, or clear a year to skip it.

More options: pension, tax code, region

Applied to every year you entered. For relief at source, enter the gross amount (what you pay plus the 25% top-up).

Codes like 1257L only. Applied to both sides of the comparison.

In 2023 the 45p rate threshold fell from £150,000 to £125,140. That was a separate policy, so it's off by default. It only matters if your taxable income is over £125,140.

Your result appears here

Enter your salary to see how much more tax you pay because thresholds were frozen instead of rising with prices.

What happened

1977: a rule against tax rises by stealth

In 1977 two Labour backbenchers, Jeff Rooker and Audrey Wise, amended the Finance Bill so that tax allowances would rise with prices every year. The aim was to stop inflation quietly raising tax. The amendment passed, defeating the government of the day (BBC).

Today: indexation is still the default

That rule lives on in the Income Tax Act 2007 (section 21 and section 57), now linked to CPI inflation. Each April the tax-free allowance and the basic rate band rise with the previous September's CPI, unless Parliament decides otherwise.

2021 onwards: Parliament switched it off

Indexation is a default, and Parliament can override it. It has done so three times:

  • Budget 2021 froze the allowance at £12,570 and the higher-rate threshold at £50,270 from 2022/23, to "begin the work of fixing our public finances" (Finance Act 2021).
  • Autumn Statement 2022 extended the freeze to April 2028 and cut the 45p threshold to £125,140 (Finance Act 2023).
  • Autumn Budget 2025 extended the freeze to April 2031 (Finance Act 2026).

The result: fiscal drag

When pay and prices rise but thresholds don't, more of every pay rise is taxed and more people are pulled into tax or onto a higher rate. The Office for Budget Responsibility calls this fiscal drag. It expects the income tax freezes to raise about £56bn a year by 2030-31. By then 5.2 million more people will pay income tax and 4.8 million more will pay the higher rate.

How we calculate your figures · Questions and answers