Experts The IFS predicted a significant windfall and “worse living standards” for families if the Income Tax and National Insurance thresholds were frozen until 2028.
Next week, Rishi Sunak is expected to announce sneaky tax increases that could rob Brits of £35 billion annually.
The PM is considering extending a freeze on tax thresholds in Thursday’s Autumn Statement, so experts issued the warning.
For a period of four years, from April 2026, the £12,570 income tax and national insurance thresholds will remain unchanged.
It is understood that the Chancellor is currently considering extending this to April 2028.
According to the Institute for Fiscal Studies, the move would add £5 billion to the £30 billion profit that the four-year freeze has already generated.
By 2028, the Treasury would have received £35 billion annually from all six years of freezes.
Because more people are forced to pay greater taxes when earnings and prices grow, this is known as “fiscal drag.”
“Whether individuals ascribe it to government-imposed tax rises or not, their incomes will be lower and their living standards will be worse,” IFS Senior Economist Stuart Adam told the Mirror.
Mr. Adam cautioned that the £35 billion estimate depended on inflation reaching 2% again in the middle of the 2020s.
The stealth tax raid would be higher if it didn’t.
It was anticipated that the four-year threshold freeze will raise £8 billion annually by 2026 when it was first announced last year.
However, rising inflation, which causes earnings to exceed the cap more quickly, drove up the forecast to £18 billion and eventually £30 billion.
The £35 billion amount provided by the IFS accounts for all income tax threshold freezes, including the £50,270 mark at which the 40p tax rate begins to apply.
Additionally, it freezes the “maximum wage ceiling” for National Insurance; nevertheless, the £12,570 National Insurance barrier is not included.
This is due to the new National Insurance threshold, which is over £3,000 a year higher than the previous threshold.
The revised National Insurance threshold was announced by Rishi Sunak in July, and he boasted that it was the “single biggest tax decrease in a decade.”
However, the IFS warned that by 2026, it will be almost gone when the tax burden catches up to where it would have been anyhow.