Overview
- International officials and new IMF projections have intensified warnings that Britain is nearing a limit on tax rises, with the Fund now expecting UK growth in 2026 of 0.8% after its latest downgrade.
- The IMF forecasts government revenues rising to about 42.1% of GDP by the start of the next decade and, on its broader measure that counts items like student loan interest and state company profits, pushing the overall burden above 40% for the first time since World War II.
- The UK’s budget watchdog, the Office for Budget Responsibility, says a higher tax take raises the risk that tax rules distort work and investment, highlighting fiscal drag from frozen tax thresholds that is moving about five million people into higher bands.
- Freezing allowances means more middle earners start paying higher rates sooner, with the personal allowance held at £12,570 rather than rising to an estimated £17,440 by the next decade, which lifts what workers pay on their next pound of income.
- Some outlets report roughly £75 billion in post‑2024 tax measures and a near 60% effective rate for earnings between £100,000 and £125,140, figures that are being cited by critics and officials as signs that the structure of UK taxes could now be curbing productivity and growth.