The Liberal Democrats have found that 6.5m UK taxpayers are being dragged into a higher tax band as a result of Conservative party budgets, including 15,000 in Chancellor Jeremy Hunt’s own constituency – a finding described as “damning” for the government with a general election looming.
With the personal allowance (£12,570) and the higher rate of income tax (£50,270) frozen until April 2028 (in what will be a six-year freeze) more people are dragged into higher tax rates due to ‘fiscal drag’. Fiscal drag – often described as a ‘stealth tax’ – sees a greater proportion of people’s income taxed, as they cross tax thresholds earlier.
The Liberal Democrats have said 6.5m people – including 15,000 in the Chancellor’s consistency of South-West Surrey – will be dragged into a higher band of income tax by 2022/28, due to ‘stealth taxes’.
Liberal Democrat Treasury spokesperson Sarah Olney MP said: “Jeremy Hunt owes an apology to the millions of hardworking Brits who will be forced to pay more tax as a result of his swindling budgets.
“The Conservative party is trying to take the British public for fools with this shameless attempt to erase Liz Truss’s botched budget and their unfair tax hikes.
“Voters across the country and in his marginal Surrey constituency will see right through this. Jeremy Hunt cannot defend his record of soaring mortgages, rocketing food prices and crippling tax rises.
Also commenting, Seb Maley, CEO of Qdos – tax compliance provider for the self-employed – said: “This is damning. Millions of taxpayers are being dragged into higher tax thresholds because of fiscal drag. With a general election on the horizon, this sleight of hand from the government could ultimately lead to its undoing.
“One group hardest hit by tax hikes – indirect or direct – is limited company directors. From the introduction of IR35 reform to the recent Corporation Tax increase and huge reduction of tax-free dividend allowance, the government has chipped away at millions of people who run their own businesses.
“Given that many of these people would have traditionally voted for the Conservative Party, it feels like self-sabotage.”
Read more:
‘Stealth taxes’ dragging 6.5m taxpayers into higher tax bands