Chancellor Rachel Reeves presented the Spring Statement in the House of Commons today, but did she introduce any significant tax adjustments?

The current freeze on personal tax thresholds will remain in effect until the conclusion of the 2030/31 fiscal year. Originally planned to be lifted in April 2028, the Chancellor extended this freeze for an additional three years in her Budget announcement last November.

Following this decision, the Office for Budget Responsibility forecasted that the freeze would lead to an increase in the number of basic-rate, higher-rate, and additional-rate income tax payers by 780,000, 920,000, and 4,000 respectively in 2029/30.

In today’s Spring Statement, Rachel Reeves did not announce any further changes to the tax thresholds. As a result, they are expected to remain frozen until the end of the 2030/31 tax year.

The concept of freezing tax brackets is commonly referred to as fiscal drag, a phenomenon where more individuals are pushed into higher tax brackets over time as their incomes rise. It is also described as a stealth tax, enabling the government to collect more revenue without officially raising tax rates.

The personal allowance denotes the threshold at which most individuals begin paying taxes, currently set at £12,570. Earnings exceeding this amount are subject to the basic 20% income tax rate. The higher 40% rate applies to incomes over £50,270, while the additional 45% rate is triggered when earnings surpass £125,140.

Moreover, the National Insurance payment threshold stands at £12,570, with an 8% contribution rate on earnings at this level and a 2% rate on income exceeding £50,270.