Higher earners could face paying an additional £7,000 in income tax if the current freeze on tax thresholds is extended to 2030 at the upcoming Budget, according to analysis from Rathbones Group.

The freeze on the personal allowance and income tax thresholds are set to end in April 2028, dragging more people into higher tax bands.

Rathbones stated that, if the freeze ran until April 2030, someone who earned £100,000 in 2022 could pay £7,077 more in tax than if the thresholds had kept pace with inflation.

Its calculations assume wage growth in line with Office for Budget Responsibility’s (OBR) data and forecasts until 2029, and 2 per cent inflation in 2030.

Thresholds are projected to follow OBR forecasts until 2027, with 2028 - 2030 rising only in line with inflation.

“With the Chancellor searching for ways to plug the nation’s financial black hole, the freeze on income tax thresholds could be dragged out further,” commented Rathbones senior financial planning director, Ade Babatunde.

“It’s taxation by stealth: the rates stay the same, but a bigger slice of your pay disappears into the taxman’s coffers.

“And it’s not just income tax. Capital gains, dividend and inheritance tax thresholds are also frozen, quietly pulling more people into the net.

“Coupled with inflation - and with talk of a wealth tax - the rising tax burden has fuelled a surge in clients asking if they can do more to reduce their liability ahead of the Budget.

“Households should prepare now. Maximising ISA and pension allowances, and increasing pension contributions, can help offset the impact.”

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