More than a million extra workers and pensioners will be pulled into paying income tax this year after Prime Minister Andy Burnham backtracked on suggestions he might raise the frozen £12,570 personal allowance. The freeze on tax thresholds, in place since 2021 and due to last until 2030/31, means wage growth continues to drag more people into paying tax even though rates have not officially risen, a process known as fiscal drag. This "stealth tax" matters because it lets the Treasury raise significant extra revenue without ministers having to announce a formal tax increase, while ordinary earners see their pay packets shrink in real terms.

Analysis by the TaxPayers' Alliance found that a million more people will pay £640 more in income tax on average this year than two years ago, with 500,000 more Britons becoming basic-rate taxpayers, 410,000 more paying the higher rate, and 70,000 more becoming additional-rate payers; HMRC expects basic-rate taxpayers to rise to 31.4 million from 27.4 million when the freeze began. Pensioners are particularly affected, with 630,000 more expected to become liable for income tax, taking the total to 10.2 million, as the state pension triple lock pushes payments close to the allowance threshold. Burnham had told The Times that frustration over the allowance had "lodged in my mind" after his Makerfield by-election campaign, and said the issue would be "looked at" in the autumn budget, but his allies later said no commitment had been made, with the freeze expected to raise £55billion by 2030 against a £9billion cost of uprating it with inflation.