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A stealth tax is costing workers £25 billion a year, almost three times more than predicted, due to the freeze on income tax bands introduced in 202121.
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The Resolution Foundation, a think-tank, says that the freeze will bring in bumper sums because of soaring inflation
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The freeze means that more employees than expected are being dragged into higher income tax bands, and an estimated £25 billion a year will pour into Treasury coffers by 2027/28.
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The threshold for paying the basic rate of income tax at 20 per cent will remain at £12,570, and the 40 per cent rate of income tax will still be levied on incomes over £50,270.1.
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The reduction in income tax thresholds and the dividend allowance will cost the top-earning 5 percent of the population an average £2,000, or 1 per cent of income.
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Council tax rises will also bite from this month, with the average Band D household facing a 5.1 per cent increase in bills, equivalent to £99.
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However, most benefits and the state pension will go up by 10.1 per cent, with more than eight million households receiving means-tested benefits enjoying enhanced cost of living payments in 2023/24 worth £900 over the year.
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The economy grew by 0.1 per cent at the end of 2022, revised figures show, suggesting "a welcome degree of resilience despite pressure from high inflation and expensive energy"
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The Resolution Foundation urged politicians to be more honest about their tax and spending policies and to inform voters about the trade-offs.
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The think-tank criticized the patchwork approach to policy, which relies on short-term support schemes, stealth tax rises, and an unfair council tax system.
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