Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Evening Standard
Evening Standard
World
Nicholas Cecil

550,000 more Londoners to be dragged into paying income tax higher rate due to threshold freeze, warn Lib-Dems

Around 550,000 more Londoners will be dragged into paying the higher rate of income tax under the Chancellor’s current threshold freeze plans, the Liberal Democrats warned on Tuesday.

They published research from the House of Commons Library showing more than half a million more Londoners will pay the 40p rate by 2027/28 due to the freeze on the threshold for paying this levy, compared to if it rose with inflation.

For the capital’s commuter belt and wider South East, the number affected would also be 550,000.

So together, 1.1 million more people in London and the South East will pay the higher rate, out of a total of just over three million across the UK.

The Lib-Dems also stressed the research had shown almost £10 billion of the £28.6 billion of additional tax revenue in 2026/27 for the Treasury due to freezing income tax thresholds will come from London and the South East.

The policy would also mean 400,000 more Londoners being brought into paying income tax, and 550,000 more in the wider South East by 2027/28.

A household in the capital would on average pay £1,340 more a year in income tax on average by 2026/27 due to the threshold freezes, compared to £1,300 in the South East, £980 in the West Midlands and £900 in the North East, according to the analysis.

In the Autumn Statement last year, Chancellor Jeremy Hunt cut the main rate of National Insurance from 12% to 10%, with similar reductions for the self-employed.

He hailed the move as the “largest ever cut to employee and self-employed National Insurance”, benefiting 29 million working people at a cost of around £9 billion.

But he did not change the Government’s threshold freeze plans raking in tens of billions of pounds.

The personal allowance is currently frozen at £12,570, above which people start paying income tax, and they move into the higher rate if they earn more than £50,270.

Liberal Democrat Treasury spokesperson Sarah Olney said: “Jeremy Hunt claims he’s cutting taxes, but in truth he’s raising income tax for millions of hard-working families. It’s an outrageous attempt to deceive the British public.

“Under this Conservative government, families are facing soaring mortgage payments, sky-rocketing energy bills and now this endless stealth tax squeeze.”

But Laura Trott, Chief Secretary to the Treasury, hit back, accusing the Lib-Dems of “not being honest with the British people about their plans to hike taxes”.

She added: “The Liberal Democrats would hit hardworking people with numerous new taxes on everyday essentials, including household heating, clothes and fuel.”

Mr Hunt is also expected to announce more tax cuts in his March 6 Budget ahead of the General Election, most likely to take place in the autumn but possibly as early as May.

Income tax and inheritance tax could be targeted.

Lib-Dem leader Sir Ed Davey was this morning driving a “Tory Removal Service” van around Guildford in a stunt to ratchet up his party’s campaign in southern England and was due to also visit the constituencies of Mr Hunt, Godalming and Ash, and Levelling-Up Secretary Michael Gove, Surrey Heath.

Reform UK was holding a launch in central London, where it will shift its focus onto winning over former Labour voters who backed the Brexit Party or Boris Johnson.

The rise of Reform UK means the Tories will face an election battle on two fronts, which will increase if Nigel Farage takes over at its helm.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.