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Tax Analysis — 2026
The UK's income tax thresholds have been frozen since 2021 — and they'll stay frozen until at least 2031. As wages rise but tax bands don't move, millions of workers are paying more tax every year without any official rate rise. This is fiscal drag — and it's costing the average worker hundreds of pounds a year. How Much Are You Actually Losing?
Estimates based on CPI inflation since 2021 applied to thresholds. Actual figures vary by year and individual circumstances. By 2031: An estimated 4 million additional people will have been pulled into paying income tax who would not have been under indexed thresholds. Around 3 million more will have been pulled into the higher 40% rate.
Current Income Tax Thresholds (Frozen Until 2031)
What Can You Do to Reduce the Impact?✅ Legal ways to reduce your tax bill
Bottom line: Frozen thresholds are a permanent, compounding tax rise. The government isn't touching the headline rate — but your effective tax rate increases every year your salary rises. Pension contributions and ISAs are your most powerful tools to fight back.
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Frozen Tax Thresholds Are Costing You More Every Year — Here's Exactly How MuchUK tax thresholds are frozen until 2031. Here's exactly how much more you're paying each year — and the legal ways to reduce the impact. 
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