A letter between Angela Raina, the Deputy Prime Minister, and Rachel Reeves, the Chancellor, discussed ways in which she could collect more tax. Item four on the list stated “continuing to freeze the additional rate tax threshold in cash terms, rather than uprating it with inflation, could raise revenue and will be consistent with the manifesto”.
Despite sounding like it only affects the rich, it actually makes a huge difference to everybody. This is the single largest tax grab since the 1970s, and hits anyone earning more than £12,570 a year. Teachers, nurses, and tradespeople – not just the additional rate tax payers as it would have you believe.
What’s worse than deliberately embracing fiscal drag – a tactic deployed to freeze tax thresholds while wages rise – is that it directly contradicts a 1977 law known as the Rooker-Wise Amendment, which mandates that tax thresholds must rise with inflation every year. Initially, this stopped politicians quietly taking more of your wages without transparently increasing tax rates.
This is not about numbers, or even wages. It’s about trust. The UK is a country already weary from politics, and now the quiet dismantling of a law meant to keep taxation honest is a big warning sign – even Labour’s own supporters are not happy.
Before we go into this, remember that fiscal drag is not a new concept, but the problem here is that tax brackets once legally bound to increase with inflation are being deliberately frozen to trick you into giving the government more of your hard-earned cash. And of course, they aren’t telling you about it...<<<Read More>>>...
