Rachel Reeves will unveil her Budget on November 26th, but if the Chancellor extends the freeze on income tax thresholds it could mean 1.3 million more people will be dragged into the higher rate bracket.

This occurs through fiscal drag, or what some experts have dubbed a ‘stealth tax’. As wages and the cost of living increases, workers are passively pushed into higher income tax brackets due to the frozen thresholds.

The Conservative government started the freeze in 2021 and it is due to continue until 2028. However, new research has revealed that if the Chancellor extends the freeze until 2030, 1.3 millionmore people will be pulled into a higher income tax rate purely due to this fiscal drag.

The research was revealed by the Lib Dems, from figures held by the House of Commons library

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