But with inflation now at a 40-year high, Sunak’s decision is expected to raise about £30bn a year by 2026, according to Stuart Adam, economist at the Institute for Fiscal Studies.
“For the last 25 years, inflation has been really low so fiscal drag didn’t tend to do that much,” he said. “Fiscal drag on the scale it’s happening now is not something that most of us are used to.”
The Centre for Economics and Business Research, a consultancy, has estimated the number of Britons paying the 45p top rate of income tax will reach 850,000 by 2026-27, up from 400,000 in 2019-20.