UK income tax: how fiscal drag leads to people falling into higher rates

We show how people are pulled into paying more without the government increasing the tax rate

Successive Conservative chancellors from Rishi Sunak to Jeremy Hunt have frozen income tax thresholds for the past four years.

The policy results in what is known by economists as “fiscal drag” – when tax thresholds do not keep up with the rising cost of living, pulling more people into higher tax brackets. Continue reading...


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