The Conservative Government’s stealth tax raid will cost the average family in the West Midlands £390 a year by 2026, research commissioned by the Liberal Democrats has revealed.

The tax hit will mean a total hit of £900 million to taxpayers across West MIdlands.

The new tax hike on households follows the Government’ refusal to increase income tax thresholds in line with inflation, which usually takes place each year. This means even more people will earn above the lowest income tax threshold, as well as be forced to pay higher bands of tax. 

The Liberal Democrats are demanding that the government drops the stealth tax that will “clobber families who are already feeling the pinch,” amid soaring energy bills and the rising cost of living.

The new analysis by the House of Commons Library has found that the freeze will mean 155,00 more people across the West Midlands on low pay will be paying income tax by 2026, while an additional 100,000 people will be dragged into an even higher rate tax bracket. It also shows that household disposable incomes are set to be 1% lower in 2025/26 than they would be if there was no freeze to income tax thresholds. 

Liberal Democrat Parliamentary Spokesperson  for Stone, Alec Sandiford, said:

“The Prime Minister must drop this unfair stealth tax that will hit families in Stone who are already feeling the squeeze.

“With the cost of living already skyrocketing, this is the last thing households need right now.”

“People are already anxious about the rising cost of living and paying their bills this winter. Now they face years of tax hikes under a Tory government that is taking them for granted.

“Many voters in the West Midlands feel the government is no longer representing them. It’s no shock that many are now shifting to the Liberal Democrats instead.”

ENDS

The Commons Library full analysis, including a breakdown by region, is available here.

• The government announced in March 2021 that it would freeze the personal tax allowance at £12,570 and higher rate tax threshold at £50,270 until 2025/26. Based on the OBR’s latest inflation forecasts, it is estimated that if the freeze wasn’t in place the higher rate threshold would increase to £56,270 in 2025/26, and that the personal allowance would increase to £14,070 in 2025/26.
  
• It is estimated that the freezes will cost households across the UK (excluding Scotland) around £10.9 billion in 2025/26. This is equivalent to £500 per household by 2025/26.  Household disposable incomes are estimated to be around 1% lower in 2025/26 than they would be if there was no freeze to income tax thresholds.
  
• The situation is different in Scotland, where the starter and basic rate bands of income tax will rise in line with inflation, while the higher and top rates of tax will remain frozen. This will still squeeze the incomes of many including NHS and teaching staff.

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