How much families will pay in extra tax after stealth rises: research

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Middle-class families will be up to £40,000 worse off over the next 10 years, it is estimated, as a result of Jeremy Hunt’s stealth taxes to plug the hole in government finances, research shows.

The Chancellor’s plan to freeze income-tax thresholds until 2028 at the earliest, announced in the autumn statement last month, has dragged thousands of families into paying tax while earnings fail to keep pace with inflation.

Research from the House of Commons Library, reported in The Times, showed that a family with two earners on £60,000 a year each will be £40,880 worse off over the next decade than they would have been if income-tax thresholds had risen in line with inflation.

Mr Hunt and allies believe the stealth raid is necessary to plug the multi-billion-pound hole in government finances, but experts fear it could doom Britain to a self-perpetuating cycle of higher taxes.

For example, the Times found that a worker earning £60,000 a year will pay an estimated more than £134,000 in income tax during the next decade, which is a tax bill 18 per cent higher than it would have been had the thresholds not been frozen.

The analysis, which was commissioned by the Liberal Democrats, found that lower earning workers will also be affected by the stealth tax rises and that someone on an average salary of around £33,000 will pay an extra £4,040 in income tax.

Sir Ed Davey, the Liberal Democrat leader, said that the Government changes represented a “lost decade of unfair tax hikes and soaring inflation”.

“Families are watching aghast as their pay cheques fall while mortgage costs soar. It is deeply shameful that the Conservative government has chosen to slash taxes for the big banks while hiking them for the public," he said.

The head of Citizens Advice, Dame Clare Moriarty, warned that higher-income families were turning to charity for help amid the cost of living crisis, saying the organisation was seeing people “who thought they’d never need us”.
 

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