Cost-of-Living Pressurehousehold welfare / prices
0.70Strengthened40% impact weight
Fiscal drag from frozen thresholds reduces real take-home pay as wages rise, intensifying cost-of-living pressure for affected households.
legislationneeds reviewconfidence: medium
Rachel Reeves extends tax-threshold freeze in November 2025 Budget
On 26 November 2025 Chancellor Rachel Reeves delivered the Autumn Budget, extending the freeze on income-tax and National Insurance thresholds to 2030-31 and introducing further revenue measures such as a cap on salary-sacrifice pension contributions from 2029. Freezing thresholds means more taxpayers are pulled into higher bands as wages rise ('fiscal drag'), increasing the effective tax burden on households without an explicit rate rise. The Budget continued the government's strategy of consolidating the public finances while protecting headline tax rates.
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What happened
On 26 November 2025 Chancellor Rachel Reeves delivered the Autumn Budget, extending the freeze on income-tax and National Insurance thresholds to 2030-31 and introducing further revenue measures such as a cap on salary-sacrifice pension contributions from 2029. Freezing thresholds means more taxpayers are pulled into higher bands as wages rise ('fiscal drag'), increasing the effective tax burden on households without an explicit rate rise. The Budget continued the government's strategy of consolidating the public finances while protecting headline tax rates.
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