Stealth tax freeze to cost average worker £50,000 more over their career

It now takes the average earner six years to cover lifetime income tax obligations

The typical worker will pay nearly £50,000 more income tax over their career compared with three years ago, analysis shows.
The average salary rose from £30,472 to £35,448 between 2020-21 and 2023-24, a 16pc rise.
However, the income tax an average earner in England would have to pay the exchequer over 48 years has increased from £172,531 to £219,633 – a £47,102 rise, or 27pc.
It means the average earner must now work for over six years solely to fulfil their lifetime income tax obligations – six months more than in 2020-21.
The Tories froze tax thresholds in 2021 as part of a stealth tax raid which has dragged millions of taxpayers into paying more tax as inflation pushes up wages.
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The personal allowance – the amount someone can earn tax-free – has been stuck at £12,570, the higher rate threshold at £50,270, and the additional rate at £125,140.
Historically, these allowances increased with inflation to account for wage growth but are set to remain at this level until at least April 2028.
The number of people paying income tax has surged by 4.5 million since the Conservatives came to power in 2010, from 31 million to 35.5 million, with workers across the payscale hit with higher tax bills.
In 2023-24, 18pc of income taxpayers were projected to pay either the higher or additional rate, up from 10.4pc in 2010, according to the Office for Budget Responsibility. Over the same period 1.1 million people have been dragged into paying the basic rate of income tax.
John O’Connell, chief executive of the TaxPayers’ Alliance campaign group, said: “Taxpayers will be shocked but not surprised about the vast amounts of extra cash that they’re having to cough up because of frozen thresholds.
“The grim reality is that the average household works for years just to pay off the taxman, yet still public services don’t seem to work, while growth is pitiful.
“Ministers need to turn rhetoric about cutting tax into reality by lifting those thresholds and ideally cutting the main rates as well.”
The analysis, by accountancy firm TaxBite, multiplied the annual tax obligation for an earner on an average salary in England by the typical number of years in a working life in the 2020-21 and 2023-24 tax years.
Chris Etherington, of tax advisers RSM, said frozen thresholds could deter people from entering the workforce.
He said: “It’s often middle-earners who are worst hit from the freezing of the allowance and thresholds. It can act as a real disincentive to work.
“We have 9.3 million people economically inactive. If we’re taxing people to the hilt in terms of their earnings, then the equation doesn’t balance.
“While the Chancellor is focused on trying to reduce the tax burden on workers, the biggest change that needs to happen is for the thresholds to be linked to inflation. That is the only thing that will make a real difference to workers’ lives.”