Reeves Plans Budget Stealth Tax Raising Millions' Income Tax Burden

Chancellor Rachel Reeves is considering extending the freeze on income tax thresholds beyond the current end date of April 2028, a move that would act as a 'stealth tax' by pushing millions of workers into higher tax brackets due to inflation-driven wage increases. Research from the House of Commons Library, commissioned by the Liberal Democrats, estimates that 1.3 million taxpayers could pay an average of £285 more annually by 2030, with London and the South East being hardest hit. This extension would generate over £10 billion in additional revenue but has sparked criticism as it breaks Labour's prior promise not to raise taxes on working households. Meanwhile, state pensioners are also expected to be affected by a related stealth tax due to the Triple Lock pension increases outpacing the personal allowance, potentially making more pension income taxable and eroding retirement income. Experts warn that without adjustments to tax thresholds or a review of the Triple Lock, pensioners with fixed incomes could see their real income decline despite nominal increases. Opposition leaders urge the government to reconsider these tax measures, arguing they unfairly burden workers and pensioners amid ongoing economic challenges.