Around 1.2m taxpayers will find their earnings exceeding the 40% tax threshold as a result of the Government’s decision to freeze the personal tax allowance and the higher rate tax threshold.
Analysis by the House of Commons Library also found that 1.5m more people will be brought into paying the basic level of income tax.
According to the research, household disposable incomes are expected to be 1% lower by 2026 across all regions than they would be if there was no freeze to income tax thresholds.
South of England to be hit the hardest
London and the south east of England are expected to be the hardest hit, with losses of around £500 per household.
In London alone there will be 210,000 additional higher rate taxpayers and 155,000 more people paying income tax.
The total cost to households across the UK, excluding Scotland, of the freezes will be £10.9bn in 2025/26, it says.
‘Stealth-tax’ will ‘clobber families’
The Liberal Democrats, who commissioned the research, called on the Government to drop its “stealth-tax raid” that will “clobber families who are already feeling the pinch.”
Liberal Democrat Treasury spokesperson Christine Jardine MP was quoted in City AM saying that families worried about paying their bills this winter face years of tax rises.
“Boris Johnson must drop this unfair stealth tax that will clobber families who are already feeling the pinch”, she said.
“People are worried about the rising cost of living and paying their bills this winter. Now they face years of tax rises under a Conservative government that is taking them for granted.”