Overview
- Citing recent analysis, 40 million people paid income tax in 2025/26, about 7 million more than when thresholds were frozen in 2021/22.
- The government confirmed in the November 2025 Budget that the personal allowance and other main tax thresholds will remain frozen until 2031.
- HMRC data show the number of people above state pension age paying income tax rose to 8.16 million in 2023/24 from 7.14 million the prior year, increasing retiree exposure.
- About 32,000 estates faced inheritance tax in 2025/26, up 5,000 since 2020/21, and bringing pensions into IHT calculations from April 2027 is projected to add roughly 10,500 more estates to the tax net.
- Advisers say households can reduce risk by using pensions and ISAs and making lifetime gifts, while analysts warn the freezes act as a ‘fiscal drag’ that raises revenue without changing headline tax rates and could squeeze household finances.