Personal Tax Allowances Frozen Until April 2028: What It Means for Taxpayers
Individuals affected by UK Income Tax thresholds, including employees, higher earners and directors. The Autumn Statement announcement on 21-11-2022 confirming that the Personal Allowance and Income Tax thresholds are frozen until April 2028, together with the reduction in the additional rate threshold. When tax thresholds remain fixed while income rises, more income is taxed at higher rates. This effect is commonly referred to as fiscal drag.Autumn Statement Announcement
At the Autumn Statement on 21-11-2022, the Chancellor confirmed that the Personal Allowance and Income Tax thresholds would remain frozen. The freeze was extended until April 2028.Personal Allowance
- The Personal Allowance remains at £12,570.
- The allowance is frozen until April 2028.
Income Tax Bands
- The basic rate band applies from £37,701 to £125,140.
- The 45% additional rate applies above £125,140.
Effective Date
The reduction in the additional rate threshold applies from 6 April 2023. The freeze of the Personal Allowance and Income Tax thresholds continues until April 2028.Fiscal Drag
The freezing of tax thresholds means that, as income increases, a greater proportion of earnings may fall into higher tax bands. This effect is commonly described as fiscal drag.Regional Variations
Regional variations in Income Tax rates apply in Scotland. The Personal Allowance remains consistent, but rate structures may differ.Real-World Impact
- An employee receiving annual pay increases may move into a higher tax band even if the increase only reflects inflation.
- A higher earner may reach the additional rate threshold sooner due to the reduction to £125,140.
- Individuals with rising income may experience increased overall tax exposure as thresholds remain frozen.
Key Points
- Personal Allowance remains at £12,570.
- Additional rate threshold reduced to £125,140.
- Thresholds frozen until April 2028.
- Reduction effective from 6 April 2023.
How Will Frozen Allowances Affect You Over Time?
With personal tax allowances frozen until April 2028, more individuals are being drawn into higher tax bands through fiscal drag rather than real income growth. Salary increases, dividends, and rental income can quietly push you into higher or additional rate thresholds without obvious warning. Seeking proactive tax planning services London helps you review how frozen bands affect your projected liabilities over the coming years. Cigma Accounting, advising clients from our Fulham Broadway and supporting individuals in Brompton Cemetery and West Brompton, provides structured planning to manage long-term exposure.
Allowance freezes also increase the likelihood of losing the Personal Allowance or triggering other income-linked restrictions. Working with an experienced tax accountant in London allows you to consider pension contributions, income timing, and remuneration adjustments before year-end. Cigma Accounting offers practical, forward-looking advice with physical offices across London, helping you stay ahead of gradual tax increases while remaining fully compliant.
ARE FROZEN TAX ALLOWANCES INCREASING YOUR LIABILITY?
With personal allowances and thresholds fixed until April 2028, rising income can gradually push you into higher bands without any headline rate changes. Reviewing your income structure now can help manage the impact of fiscal drag.
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