Budget 2024 – Tax thresholds to increase in 2028

Budget 2024 – Tax thresholds to increase in 2028

The chancellor announced in the budget that the personal tax thresholds for income tax and National Insurance will rise in line with inflation in 2028/29 for the first time since the 2020/21 tax year, which will finally release the fiscal drag which is pulling millions of people into paying tax for the first time and nearly one million taxpayers into higher rate tax.

Although there is still a four year wait until the freeze is removed, this will no doubt be welcomed by the UK public.

It is believed that the tax revenue foregone from 2028 will be more than recouped by the increase in employers’ national insurance contributions and the reduction to the threshold from which contributions are paid.

While this future rise in thresholds will not be felt immediately in the public’s pockets, the end of frozen thresholds will eventually give taxpayers more money in their pocket and could avoid dragging pensioners on the state pension only into income tax.