Britain will not extend a freeze on the amount of money that people can earn tax-free beyond 2028-2029, finance minister Rachel Reeves said in her first budget speech on Wednesday.
The policy was first implemented by the former Conservative government in March 2021 when the threshold was frozen until 2026. It was extended two years ago until the 2028/29 tax year.
Britain's budget watchdog has estimated the freeze would raise an extra 33.6 billion pounds ($43.56 billion) a year by 2028/29, making it a big revenue-raiser for the public finances but leaving the government exposed to criticism of using a stealth tax.
Reeves said prolonging the freeze would hurt working people and take more money out of their pay. Extending the freeze would have dragged more workers into paying tax and more people into higher tax bands.
Prime Minister Keir Starmer promised voters before July's election that he would not put up income tax rates or other key rates of taxation on "working people".
Wednesday's announcement means that the personal tax-free allowance threshold and higher rate threshold in England and Northern Ireland will remain at 12,750 pounds and 50,270 pounds a year respectively.
From financial year 2028-29, personal tax thresholds will be uprated in line with inflation, Reeves said.
($1 = 0.7691 pounds)
