In this section: Every tax
Frozen thresholds, and what they cost
Last updated . Figures refresh every night. How each figure is worked out.
A frozen threshold raises tax every year that pay and prices rise, without any rate changing. The Personal Allowance has been £12,570 since April 2021 and the higher-rate threshold £50,270; both are fixed until April 2031. Had the allowance risen with inflation it would be £16,070 in 2026–27. The OBR estimates the freezes raise £42.3bn this year and have pulled 4.88 million more people into paying income tax.
Figure as of 1 March 2026. Source: Office for Budget Responsibility, Office for Budget Responsibility.
Key figures
- £12,570Personal Allowance Frozen since April 2021, until April 2031
- £16,070Where the Personal Allowance would be in 2026–27 had it risen with inflation OBR estimate
- £42.3bnRaised by the threshold freezes in 2026–27 (OBR estimate) up on a year earlier: +£8.9bn (+26.6%) vs 2025–26
- 4.88 millionExtra people paying income tax because of the freezes, 2026–27 up on a year earlier: +0.95m (+24.2%) vs 2025–26
- 3.39 millionExtra people paying the higher rate, 2026–27 up on a year earlier: +0.57m (+20.2%) vs 2025–26
Source: Office for Budget Responsibility.
What is the short version?
- Not just income tax: 12 thresholds are held in cash, the oldest the inheritance tax nil-rate band, £325,000 since 2009.
- It grows every year: the OBR expects the freezes to raise £67.0bn by 2030–31.
- Into the higher rate: 3.39 million people pay 40% who would not have, and 590,000 people whose main income is the state pension now pay income tax because of it.
- For one person: about £979 a year at £35,000; the calculator below works it out for any salary.
- By law, not by default: the allowance would rise with CPI each April; every freeze is Parliament deciding otherwise in a Finance Act.
Which thresholds are frozen, and until when?
| Threshold | Value | Held since | Held until | Had it been indexed |
|---|---|---|---|---|
Income tax Personal Allowance It was also £12,500 in both 2019-20 and 2020-21. The freeze was legislated in the Finance Acts of 2021, 2023 and 2026.Details for Income tax Personal Allowance It was also £12,500 in both 2019-20 and 2020-21. The freeze was legislated in the Finance Acts of 2021, 2023 and 2026. | £12,570 a year | 2021 | 2031 | £16,070 OBR |
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Basic rate limit (the width of the 20% band) Added to the Personal Allowance it gives the higher-rate threshold.Details for Basic rate limit (the width of the 20% band) Added to the Personal Allowance it gives the higher-rate threshold. | £37,700 a year | 2021 | 2031 | £48,400 CPI, our calculation |
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Higher-rate threshold Scotland sets its own higher-rate starting point.Details for Higher-rate threshold Scotland sets its own higher-rate starting point. | £50,270 a year | 2021 | 2031 | £64,470 OBR |
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Additional-rate threshold Cut from £150,000 to £125,140 in April 2023, then frozen.Details for Additional-rate threshold Cut from £150,000 to £125,140 in April 2023, then frozen. | £125,140 a year | 2023 | 2031 | — |
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National Insurance primary threshold (employees) £12,570 a year. It was raised to match the Personal Allowance in July 2022 and has been frozen since.Details for National Insurance primary threshold (employees) £12,570 a year. It was raised to match the Personal Allowance in July 2022 and has been frozen since. | £242 a week | 2022 | 2031 | — |
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National Insurance upper earnings limit £50,270 a year. Above it employees pay 2% rather than 8%, so a frozen limit keeps more pay in the 8% band.Details for National Insurance upper earnings limit £50,270 a year. Above it employees pay 2% rather than 8%, so a frozen limit keeps more pay in the 8% band. | £967 a week | 2021 | 2031 | — |
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Employer National Insurance secondary threshold £5,000 a year. Cut from £9,100 in April 2025, when the employer rate rose to 15%, and held there to April 2031.Details for Employer National Insurance secondary threshold £5,000 a year. Cut from £9,100 in April 2025, when the employer rate rose to 15%, and held there to April 2031. | £96 a week | 2025 | 2031 | £100 CPI, our calculation |
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Inheritance tax nil-rate band Legislated to April 2031 in the Finance Act 2026, section 72.Details for Inheritance tax nil-rate band Legislated to April 2031 in the Finance Act 2026, section 72. | £325,000 | 2009 | 2031 | £535,000 CPI, our calculation |
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Inheritance tax residence nil-rate band HMRC's thresholds table still shows 5 April 2030 for this band; the Budget 2025 overview and the Finance Act 2026 both say 2031.Details for Inheritance tax residence nil-rate band HMRC s thresholds table still shows 5 April 2030 for this band; the Budget 2025 overview and the Finance Act 2026 both say 2031. | £175,000 | 2020 | 2031 | £228,000 CPI, our calculation |
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VAT registration threshold Held at £90,000 for 2025-26 and 2026-27 with no end date announced. Before that it was frozen at £85,000 for seven years, from April 2017 to March 2024.Details for VAT registration threshold Held at £90,000 for 2025-26 and 2026-27 with no end date announced. Before that it was frozen at £85,000 for seven years, from April 2017 to March 2024. | £90,000 a year | 2024 | no end date announced | — |
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Pension annual allowance Set in cash and never indexed. The money purchase annual allowance (£10,000) and lump sum allowance (£268,275) are also fixed in cash.Details for Pension annual allowance Set in cash and never indexed. The money purchase annual allowance (£10,000) and lump sum allowance (£268,275) are also fixed in cash. | £60,000 a year | 2023 | no end date announced | — |
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Plan 2 student loan repayment threshold Rose to £29,385 in April 2026, then held there for 2027-28, 2028-29 and 2029-30 under Budget 2025.Details for Plan 2 student loan repayment threshold Rose to £29,385 in April 2026, then held there for 2027-28, 2028-29 and 2029-30 under Budget 2025. | £29,385 a year | 2027 | 2030 | — |
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How “had it been indexed” is worked out
"Had it been indexed" uses the OBR's own figure where it publishes one. Otherwise it is our calculation: the frozen value uprated by the September CPI figure for each year of the freeze and rounded the way the law would round it (the Personal Allowance to the next £10, the basic rate limit to the next £100, the inheritance tax bands to the next £1,000). Thresholds that are not indexed by law at all, like the pension annual allowance and the VAT threshold, have no counterfactual shown, because there is no rule to apply.
Checked 22 September 2026. Source: Office for Budget Responsibility. Checked by hand 22 September 2026.
Figure as of 1 August 2026. Source: Office for National Statistics.
How has the Personal Allowance moved over the long run?
The allowance rose faster than inflation for most of the 2010s, as a policy choice, and has been frozen since April 2021. The indexed line is the OBR’s counterfactual, uprated each year by September CPI.
The numbers behind this chart
| From | Personal Allowance | Had it risen with inflation (OBR) |
|---|---|---|
2010-04-06Details for 2010-04-06 | £6,475 | — |
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2011-04-06Details for 2011-04-06 | £7,475 | — |
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2012-04-06Details for 2012-04-06 | £8,105 | — |
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2013-04-06Details for 2013-04-06 | £9,440 | — |
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2014-04-06Details for 2014-04-06 | £10,000 | — |
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2015-04-06Details for 2015-04-06 | £10,600 | — |
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2016-04-06Details for 2016-04-06 | £11,000 | — |
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2017-04-06Details for 2017-04-06 | £11,500 | — |
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2018-04-06Details for 2018-04-06 | £11,850 | — |
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2019-04-06Details for 2019-04-06 | £12,500 | — |
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2020-04-06Details for 2020-04-06 | £12,500 | — |
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2021-04-06Details for 2021-04-06 | £12,570 | £12,570 |
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2022-04-06Details for 2022-04-06 | £12,570 | £12,960 |
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2023-04-06Details for 2023-04-06 | £12,570 | £14,270 |
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2024-04-06Details for 2024-04-06 | £12,570 | £15,220 |
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2025-04-06Details for 2025-04-06 | £12,570 | £15,480 |
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2026-04-06Details for 2026-04-06 | £12,570 | £16,070 |
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Figure as of 22 September 2026. Source: Office for Budget Responsibility, Office for Budget Responsibility.
How much do the freezes raise?
The OBR estimates how much more tax is paid because thresholds were frozen rather than uprated, and publishes the estimate at every Budget and Spring Statement. For 2026–27 it is £42.3bn, rising to £67.0bn in 2030–31.
Years after the current one are OBR forecasts. "All threshold changes" also includes the 2022 rise in the National Insurance primary threshold and the 2023 cut to the additional-rate threshold, which pull in opposite directions, so it is not the sum of the two lines above.
The numbers behind this chart
| Year | Personal Allowance and higher-rate threshold | Class 1 National Insurance thresholds | All threshold changes |
|---|---|---|---|
2022–23Details for 2022–23 | £3bn | £0bn | £-4.1bn |
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2023–24Details for 2023–24 | £13.2bn | £3.5bn | £11.3bn |
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2024–25Details for 2024–25 | £24.3bn | £6.2bn | £27.9bn |
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2025–26Details for 2025–26 | £28.4bn | £7bn | £33.4bn |
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2026–27Details for 2026–27 | £34bn | £10.2bn | £42.3bn |
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2027–28Details for 2027–28 | £38.5bn | £12.3bn | £48.7bn |
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2028–29Details for 2028–29 | £43.5bn | £12.7bn | £54.1bn |
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2029–30Details for 2029–30 | £49.1bn | £13.5bn | £60.3bn |
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2030–31Details for 2030–31 | £55.2bn | £14.2bn | £67bn |
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Figure as of 1 March 2026. Source: Office for Budget Responsibility.
How many people does it pull in?
In 2026–27 the OBR estimates 4.88 million people pay income tax who would not have with indexed thresholds, 590,000 of them people whose main income is the state pension. A further 3.39 million pay the higher rate who otherwise would not.
Against thresholds that had risen with inflation. Years after the current one are forecasts.
The numbers behind this chart
| Year | Brought into income tax | Brought into the higher rate |
|---|---|---|
2022–23Details for 2022–23 | 0.57m | 0.41m |
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2023–24Details for 2023–24 | 2.56m | 1.51m |
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2024–25Details for 2024–25 | 3.73m | 2.41m |
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2025–26Details for 2025–26 | 3.93m | 2.82m |
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2026–27Details for 2026–27 | 4.88m | 3.39m |
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2027–28Details for 2027–28 | 5.23m | 3.74m |
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2028–29Details for 2028–29 | 5.55m | 4.03m |
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2029–30Details for 2029–30 | 5.84m | 4.38m |
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2030–31Details for 2030–31 | 6.14m | 4.76m |
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Figure as of 1 March 2026. Source: Office for Budget Responsibility.
What does the freeze cost me?
For one person, the cost is the tax on the slice of income that would have fallen under the higher threshold. We work it through for four salaries, with every assumption shown, on what frozen thresholds cost a household. At £35,000 it comes to about £979 a year in income tax and National Insurance.
Work out your take-home pay after income tax and National Insurance
Why is it called fiscal drag?
Under the Income Tax Act 2007 the Personal Allowance and basic rate limit rise each April by the previous September's CPI, unless Parliament decides otherwise. Every freeze is Parliament deciding otherwise, in a Finance Act:
- 2021The first freeze, for the first years.
- 2023Extended to 2028.
- 2026Extended to 2031.
As wages rise, more income falls above each fixed line, which is the "drag".
It is sometimes called a stealth tax. The freezes were announced and costed in public, so they are not hidden in that sense; what they share with other stealth taxes is that the amount paid rises every year with no new decision.
Income tax, capital gains tax, inheritance tax, VAT and duties
Consolidated Fund (general Treasury funds) the Consolidated Fund, with no earmark. National Insurance goes to the National Insurance Fund.
Exchequer and Audit Departments Act 1921, s2 (HMRC Trust Statement)
HMRC accounts for taxes, fines and penalties in its Trust Statement, prepared under section 2 of the Exchequer and Audit Departments Act 1921, and pays net receipts into the Consolidated Fund. National Insurance goes to the National Insurance Fund.
Legal position as of 22 September 2026. Source: legislation.gov.uk. Checked by hand 22 September 2026.
Is freezing thresholds legitimate?
The case for
- It is announced openly and costed by the OBR, like any other measure.
- It spreads a tax rise thinly rather than concentrating it on a few.
- Uprating is a policy choice, not an entitlement: Parliament can decide either way each year.
- The alternative is a visible rate rise or spending cuts of the same size.
The case against
- The rise compounds silently, with no annual decision to defend.
- It pulls people into higher rates that were designed for much higher real incomes.
- It now reaches pensioners: the OBR counts 590,000 people whose main income is the state pension among those brought into tax.
- It hits hardest when inflation is high, which is when households can least absorb it.
Common questions
- What is fiscal drag?
- Tax thresholds staying the same while wages and prices rise, so more of your income falls above them and more people are pulled into higher bands. It raises tax without any rate changing.
- How long is the Personal Allowance frozen for?
- It has been £12,570 since April 2021 and is fixed until 5 April 2031, under the Finance Act 2026.
- What would the Personal Allowance be if it had not been frozen?
- £16,070 in 2026–27, on the OBR’s estimate.
- How many people do frozen thresholds pull into tax?
- The OBR estimates 4.88 million extra income tax payers and 3.39 million extra higher-rate payers in 2026–27.
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Sources for this page
| Source | Publisher | Figures as of | Updated | Licence |
|---|---|---|---|---|
| Economic and fiscal outlook, March 2026: detailed receipts tables | Office for Budget Responsibility | 1 March 2026 | semiannual | Open Government Licence v3.0 |
| Office for Budget Responsibility, Economic and fiscal outlook, November 2025, Box 3.3 | Office for Budget Responsibility | 22 September 2026 | semiannual | Open Government Licence v3.0 |
| CPI annual rate, all items (D7G7) | Office for National Statistics | 1 August 2026 | monthly | Open Government Licence v3.0 |
| legislation.gov.uk and official guidance, provision by provision | legislation.gov.uk | 22 September 2026 | annual | Open Government Licence v3.0 (legislation.gov.uk) |
Each source's figures are used under the licence shown. Our own words, analysis, charts and derived calculations are ours, under CC BY 4.0.