Those earning over £100,000 could face paying over £7,000 in extra income tax if the current freeze on tax thresholds - due to end in 2028 - is extended to 2030, according to a new report. 

The Chancellor is currently considering methods of closing the UK’s fiscal gap, including extending freezes on income tax thresholds, according to reports.

The freeze on the personal allowance (£12,570) and income tax thresholds (£12,571, £50,271 and £125,140 for the basic, higher and additional rates) began in April 2022 and is set to end in April 2028.

If the freeze runs until April 2030, according to analysis from wealth manager Rathbones, someone who earned £100,000 in 2022 could pay £7,077 more in tax than if thresholds had kept pace with inflation.

The additional tax burden would be £5,635 for someone who was on £80,000, £4,632 for those who earned £50,000, and £926 for those on £35,000.

Ade Babatunde, senior Financial Planning director at Rathbones, said: “With the Chancellor searching for ways to plug the nation’s financial black hole, the freeze on income tax thresholds could be dragged out further. It’s taxation by stealth: the rates stay the same, but a bigger slice of your pay disappears into the taxman’s coffers.

“And it’s not just income tax. Capital gains, dividend and inheritance tax thresholds are also frozen, quietly pulling more people into the net. Coupled with inflation - and with talk of a wealth tax - the rising tax burden has fuelled a surge in clients asking if they can do more to reduce their liability ahead of the Budget.”

Even if the freeze ends in April 2028, the extra tax burden would still be significant according to Rathbones’ calculations:

• £100,000 earner: £6,476
• £80,000 earner: £4,488
• £50,000 earner: £3,964
• £35,000 earner: £793

• Rathbones’ figures assume wage growth in line with the Office for Budget Responsibility’s data and forecasts, and 2% inflation in 2030. Income tax thresholds are assumed to increase in line with OBR forecasts until 2027, with 2028–2030 rising only in line with the 2% target. ‘Extra tax burden’ is calculated by comparing tax liabilities under a frozen threshold policy with those under thresholds uprated annually with inflation.