Dragging people into higher rates of tax


This Saturday (6 April 2019) marks the start of a new tax year. Unlike many other countries, the UK routinely – and sensibly – uprates the cash values of most tax thresholds and benefit rates each year in line with inflation, in order to maintain their real value. In a number of cases, however, this routine uprating has now been cancelled for extended periods: The inheritance tax threshold has been fixed at £325,000 since 2009–10. Fuel duties have not increased in cash terms since April 2010. Most working-age benefits have been frozen in cash terms since 2015–16. The VAT registration threshold has been frozen at £85,000 since April 2017, and the last Budget announced that it would remain frozen until April 2022. Some of these policies raise revenue; others give money away. But in neither case is it sensible policymaking.

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