UK government tax threshold freeze will cost Wales £ 500million in five years, new study finds

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Photo of Rishi Sunak by No 10 Downing Street (CC BY-NC-ND 2.0).

The UK government’s decision to freeze tax thresholds will cost the average Wales family £ 370 a year by 2026, a total of £ 500million, an analysis from the House of Commons library has shown. communes.

Figures show the cost to families of the UK Treasury’s decision to freeze the personal tax allowance at £ 12,570 and a higher tax threshold at £ 50,270 until 2025/2026, which the Liberals say Democrats, who commissioned the study, “will worsen the growing cost of living crisis.”

New analysis from the House of Commons Library has found that an additional 85,000 low-wage people in Wales will pay income tax by 2026, while another 55,000 people in Wales will pay income tax. highest tax bracket, compared to if the threshold had not been frozen.

London and the south-east of England are expected to be the hardest hit, with losses of around £ 500 per household. The total cost of gels to households in the UK, excluding Scotland, will be £ 10.9 billion in 2025/2026, the statement said.

The research is based on modeling using the latest inflation forecasts from the Office of Fiscal Responsibility, they said.

This means that across Wales, disposable household income is expected to be 1% lower in 2025/26 than it would be had there not been a freeze on income tax thresholds. , or £ 370 less per household.

Chancellor Rishi Sunak argued that it would be irresponsible to “dodge the tough decisions” about public finances.

Bt the Welsh Liberal Democrats have said the UK government should drop the planned “tax stealth raid” to help families cope with rising energy bills and general inflation. This would mean that the tax thresholds would increase in line with inflation.

“Stealth tax”

Welsh Liberal Democrat leader Jane Dodds MS said: “Boris Johnson and Rishi Sunak must drop this unfair stealth tax which will hit families who are already feeling the pinch.

“People are worried about the rising cost of living and paying their energy bills this winter. Now they face years of tax increases under a Conservative government that takes them for granted time and time again.

To make matters worse, the government is introducing an increase in the national insurance tax on top of this stealth tax and rapid increases in energy prices, doing so against the will of its own backbench MPs in the Conservative party.

“It’s no wonder many longtime Conservative voters in Aberconwy, Powys, Monmouthshire feel this government no longer represents them. Many of them are now turning to the Welsh Liberal Democrats instead. “

It was reported that Jacob Rees-Mogg told the Chancellor at Wednesday’s Cabinet meeting that the national insurance hike should be phased out in order to ease the cost of living crisis as inflation and energy bills go up.

But speaking during a visit to a vaccination center in Haywards Heath, West Sussex, on Thursday, Chancellor Rishi Sunak said: ‘I have enormous respect for all of my colleagues and if you take a step back and look in back why we are in this situation is because we are facing an unprecedented level of arrears in the NHS and we as a government do not think it is acceptable, we do not want them families wait years and years for the treatment they need.

“It’s always easy to dodge tough decisions, but I don’t think it’s the responsible thing to do.”


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