Tax & HMRC
⏱ 2 min read
📅 Updated Apr 2026
Frozen Tax Thresholds Are Costing You More Every Year — Here's Exactly How Much
UK 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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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?
| Annual Salary | Extra Tax Paid (vs index-linked thresholds) | Cumulative Since 2021 |
|---|
| £25,000 | ~£200/year | ~£800 |
| £35,000 | ~£500/year | ~£2,000 |
| £50,000 | ~£800/year | ~£3,200 |
| £60,000 | ~£1,200/year | ~£4,800 |
| £80,000 | ~£1,500/year | ~£6,000 |
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)
| Band | Threshold | Rate |
|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
What Can You Do to Reduce the Impact?
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.
By Chandraketu Tripathi · Updated April 2026 · kaeltripton.com
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The content on Kaeltripton.com is for informational and educational purposes only and does not constitute financial, investment, tax, legal or regulatory advice. Kaeltripton.com is not authorised or regulated by the Financial Conduct Authority (FCA) and is not a financial adviser, mortgage broker, insurance intermediary or investment firm. Nothing on this site should be construed as a personal recommendation. Rates, figures and product details are indicative only, subject to change without notice, and should always be verified directly with the relevant provider, HMRC, the FCA register, the Bank of England, Ofgem or other appropriate authority before any financial decision is made. Past performance is not a reliable indicator of future results. If you require regulated financial advice, please consult a qualified adviser authorised by the FCA.
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Chandraketu Tripathi
Finance Editor · Kaeltripton.com
Chandraketu (CK) Tripathi, founder and lead editor of Kael Tripton. 22 years in finance and marketing across 23 markets. Writes on UK personal finance, tax, mortgages, insurance, energy, and investing. Sources: HMRC, FCA, Ofgem, BoE, ONS.
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