Despite the 'billions' this move could save, it would 'hurt' working people, the Chancellor said
The Chancellor of the Exchequer has confirmed income tax thresholds will not remain frozen beyond 2028 during today’s Budget announcement. Despite previous speculation that Labour would extend the Income Tax threshold freeze previously set my the former Conservative Government to 2030, Chancellor Rachel Reeves said this would not be the case.
She told her peers: "I've come to the conclusion that extending the threshold freeze would hurt working people. It would take more money out of their pay slips. I'm keeping every single promise on tax that I made in our manifesto." How is Income Tax calculated? Income Tax is based on your earnings from employment and profits from self-employment during the tax year, which runs from April 6 to April 5 the next year. It is also paid on other incomes including some benefits and pensions, income from renting out property, and returns from savings and investments above certain limits.
If you earn more than £100,000, you also start losing the £12,570 tax-free personal allowance. You lose £1 of your personal allowance for every £2 that your income goes above £100,000.
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