What are the Conservative Government’s plans?
In March 2021, Rishi Sunak, the Chancellor of the Exchequer, confirmed the Government would not raise the rates of income tax, National Insurance or VAT. Mr Sunak also confirmed personal tax thresholds would be frozen.
Mr Sunak said: “We’ve nearly doubled the income tax personal allowance over the last decade, making it the most generous of any G20 country.
“We will of course deliver our promise to increase it again next year to £12,570, but we will then keep it at this more generous level until April 2026.
“The Higher Rate threshold will similarly be increased next year, to £50,270, and will then also remain at that level for the same period.
“Nobody’s take home pay will be less than it is now, as a result of this policy. But I want to be clear with all Members that this policy does remove the incremental benefit created had thresholds continued to increase with inflation.
“We are not hiding it, I am here, explaining it to the House and it is in the Budget document in black and white. It is a tax policy that is progressive and fair.”
Inheritance Tax, the Pensions Lifetime Allowance, and the annual exempt amount in Capital Gains Tax were all frozen at their current levels until April 2026.