Frozen Tax Thresholds: The Silent UK Tax Rise
The number of UK higher-rate taxpayers doubled in a decade. No party stood on a manifesto to do it. So how did 4 million workers get there?
Frozen UK tax thresholds vs CPI-uprated equivalents
| Threshold | Current (2026/27) | Frozen since | CPI-uprated |
|---|---|---|---|
| Personal Allowance | £12,570 | 2021/22 | ~£15,500 |
| Higher-rate threshold | £50,270 | 2021/22 | ~£62,000 |
| Dividend allowance | £500 | Cut from £5,000 | n/a (cut) |
| Capital gains allowance | £3,000 | Cut from £12,300 | n/a (cut) |
| IHT nil-rate band | £325,000 | 2009 | £500,000+ |
Source: gov.uk thresholds, ONS CPI series. The IHT band has been frozen for over 15 years.
Key takeaways
Frozen tax thresholds are the most expensive tax change of the past decade. The Personal Allowance and the higher-rate threshold have been held flat since 2021/22 while wages and prices have climbed sharply.
Fiscal drag pulls workers into higher tax bands without anyone explicitly voting to put them there. The Office for Budget Responsibility estimates the threshold freezes will raise tens of billions a year by 2028/29.
The number of UK higher-rate taxpayers has roughly doubled in a decade, from around 4 million to over 8 million, largely without a public conversation about it.
Whichever party is in power, frozen thresholds have become the default fiscal lever. They are a tax rise dressed as inaction, and they hit middle earners hardest.