Rachel Reeves could impose a growing tax burden on Britain's high earners if she chooses to extend the freeze on income tax thresholds in the autumn Budget.
The Chancellor could impose an additional £7,000 in income tax on Brits earning over £100,000 if the freeze continues, according to analysis from wealth manager Rathbones, as reported by .
An extension would pull 1.4m people into the highest rate bracket, which includes those earning over £125,140 a year.
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Reeves is set to increase taxes by up to £50bn in the autumn in an effort to regain her £9.9bn in fiscal headroom.
This has sparked concerns that she will resort to frozen income tax thresholds – often referred to as fiscal drag – which are due to expire in 2028.
The combination of the freeze with rising inflation and wages would present a financial challenge for taxpayers nationwide.
For those earning £80,000, the additional tax burden would be £5,635, and for those earning £50,000, it would be £4,632.
Ade Babatunde, senior financial planning director at Rathbones, commented: "With the Chancellor searching for ways to plug the nation's financial black hole, the freeze on income tax thresholds could be dragged out further. ".
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"It's taxation by stealth: the rates stay the same, but a larger portion of your pay disappears into the taxman's coffers."
Income tax receipts jump
The speculation around tax comes in the wake of a series of Labour policy reversals and a £190bn spending spree at the Spending Review, which significantly reduced the Chancellor's minimal fiscal leeway. Reeves' £9.9bn was the third smallest on record for any Chancellor since 2010.
Reeves' own "iron clad" fiscal rules stipulate that day-to-day spending must be financed by tax receipts.
City analysts have forecasted that tax increases could range from £10bn, a figure suggested by banking giant JP Morgan, to £50bn – a pessimistic prediction from the National Institute of Economic and Social Research.
Income tax receipts for July totalled £4.5bn following an increase in self-assessed taxpayers.
Sarah Coles, head of personal finance at Hargreaves Lansdown, commented: "We saw the usual self-assessment bump in July, as people who work for themselves and meet the criteria make their payments on account."
However, Coles noted that the higher tax intake cannot be dismissed as a "one-off", with the self-assessment tax up 21 per cent from last year.
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"Early estimates suggest we might pay an estimated £89.2 billion more in tax on our earnings in the current tax year. This is due in large part to the frozen tax thresholds," she added.
"Speculation about possible income tax changes in the autumn Budget hasn't been widespread, but we can't rule out the risk that the freeze in tax thresholds could be extended and drag even more people into expensive tax bills."