Nine million low and middle-income earners will be hit by a £46billion ‘stealth tax’ after the Chancellor failed to reverse a draconian four-year freeze on tax bands.
Kwasi Kwarteng portrayed his package as a tax-cutting mini-Budget – but pressed ahead with a bombshell tax raid sneaked in by his predecessor Rishi Sunak.
The extra money raised through the freeze will dwarf cuts in the basic and higher tax rates.
In a little-noticed measure in Sunak’s Budget in March last year, the amount at which people begin paying tax was frozen at the 2021/22 level of £12,570.
Sunak pegged the threshold for the 40 per cent rate at £50,271. Both thresholds will remain the same until the 2025/26 tax year.
The move was announced before prices started soaring and was initially estimated to cost taxpayers £8billion.
But the true cost has been rocketing due to escalating inflation, which is currently running at nearly 10 per cent.
Research conducted exclusively for The Mail on Sunday by the Centre for Economics and Business Research (CEBR) predicts that nearly five million lower-paid workers who currently pay no income tax will be dragged into the net over the next four years.
Another 3.8million taxpayers will be pulled into the 40 per cent band as wages rise.