Back in 2021, Chancellor Sunak announced in his budget that income tax personal allowance and the higher rate threshold would remain frozen for four years – from 2022/23 until 2025/26.
As previously announced, the Income-tax increased to £12,570 for 2021/22 and has remained frozen.
According to IFS analysis, £20.5bn will be collected in tax rather than £8bn Sunak predicted in March 2021. The freeze in income tax and rising inflation indicate that the treasury will collect £13bn more than predicted. Income tax thresholds usually rise along with inflation, yet they were frozen when inflation was 1.6%. With inflation expected to rise to 8%, more people are expected to begin paying taxes or pay a higher tax rate.
These are the income tax rates and bands according to the Gov.UK website.
| Band | Taxable Income | Tax Rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,570 to £50,270 | 20% |
| Higher Rate | £50,270 to £150,000 | 40% |
| Additional Rate | Over £150,000 | 45% |
Source: GOV.
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