What has changed
With tax thresholds frozen, pay rises quietly pull more people into higher tax bands over time, an effect known as fiscal drag.
Who it affects
Anyone whose income is rising while the bands stay frozen, especially those near a threshold.
What you should do
Use pension contributions and other allowances to manage your taxable income, particularly if you are close to the higher rate threshold or the personal allowance taper.
Our view
Fiscal drag is a stealthy tax rise. A little planning around the thresholds can keep more of your pay rise in your pocket.
Common questions
Who does this affect?
Anyone whose income is rising while the bands stay frozen, especially those near a threshold.
What should I do about it?
Use pension contributions and other allowances to manage your taxable income, particularly if you are close to the higher rate threshold or the personal allowance taper.
Can TaxTune help me with this?
Yes. Tell us your situation through the quote builder or book a free call, and we will explain exactly what it means for you and handle it if you would like.