Households across the UK will be nearly £8,000 worse off from January after a series of tax raids take hold, new analysis has suggested.
The tax pressure on families in particular is set to become unprecedented, the Institute for Fiscal Studies has warned.
It said that a middle-class family with one child in private school would be £7,730 worse off in taxes in 2025, based on a middle-class household with two adults each earning £55,910.
That includes £3,520 from ‘fiscal drag’ hampering spending power due to threshold freezes, £1,410 from increased employer National Insurance and £2,626 in extra school fees following the addition of VAT to bills, according to analysis published in the Telegraph.
This year, employee National Insurance was increased, with 60 percent of the cost expected to be passed on to employees.
At the same time, thresholds for Income Tax were frozen again, and will remain frozen until at least 2028. It means that as wages rise, more and more people will pay more tax as they cross over the £12,570 and £50,270 and even £125,000 thresholds for higher Income Tax bands.
Carl Emmerson, the deputy director of the Institute for Fiscal Studies, said: “With the UK tax burden rising to levels that we haven’t previously seen in this country it is no surprise that people will feel squeezed.
“What remains to be seen is how well they feel the money is being spent and how much those households benefit from any improvement in public services.”
A spokesman for the Treasury said: “We know that many families are feeling the pinch, which is why we protected payslips from higher taxes as well as higher VAT, gave a pay rise to three million workers next year, kept prices down at the pumps by freezing fuel duty, and are not extending the freeze on personal tax thresholds past 2027/28.
“Now we have wiped the slate clean, our Plan for Change is focused on delivering growth that people will feel the impact of, with figures this month showing that wages after inflation have grown at the fastest rate in three years since the election worth an extra £20 a week after inflation.”
