Use Our Tax Calculator to See How the Spring Statement Affects You
Eight hours ago, Tommy Lumby and Phil Leake reported on the latest economic update from Chancellor Rachel Reeves as part of the Spring Statement. This update includes forecasts for inflation and wage growth over the next five years.
While wage growth is expected, the frozen income tax and National Insurance thresholds could lead to higher tax bills as your salary increases. Initially frozen until 2028-29 by the Conservatives, these thresholds have now been extended to 2031 by Labour, effectively acting as a stealth tax. This approach raises additional revenue for public services without explicitly increasing tax rates.
Discover How Your Pay Will Be Impacted
Use our tax calculator below to see how much your take-home pay may change as a result of these frozen thresholds. Note that this tool is applicable to employees in England, Wales, and Northern Ireland. Tax bands in Scotland differ, and self-employed individuals face different taxation rules.
How the Calculator Works
– Extra Tax Estimation: This calculator estimates your additional tax and National Insurance contributions (NICs) you will owe in the 2030-31 tax year due to frozen thresholds.
– Official Forecasts: Based on official forecasts from the Office for Budget Responsibility (OBR) for March 2026, it shows the potential extra amount you could pay compared to if thresholds had increased since 2026-27.
– Impact of Government Decisions: It highlights how much of the increase is attributed to the government’s extension of the freeze from 2028-29.
– Results Privacy: Your results are not stored in our system.
What the Calculator Does Not Include
While this calculator provides insights into the impact of frozen tax thresholds, it does not take into account:
– Over State Pension Age: If you’re over state pension age, you may be exempt from paying NICs.
– Tax Reliefs: It doesn’t factor in tax relief available on pension contributions.
– Other Taxes and Allowances: Various taxes you may owe and potential tax credits or allowances are not considered.
– Geographical Differences: It is intended solely for employees in England, Wales, and Northern Ireland, as tax bands vary in Scotland.
– Self-Employment Taxes: Self-employed workers are taxed through different regulations and are excluded from this calculator’s findings.
How Earnings and Tax Thresholds are Calculated
– Earnings Growth: The calculator assumes your salary will rise in alignment with OBR forecasts for average weekly earnings growth. Keep in mind that actual wage increases may vary.
– Employment Stability: It presumes your salary remains consistent. Fluctuations or job changes could impact your income trajectory.
– Inflation Forecasts: It utilizes Consumer Prices Index (CPI) inflation figures to estimate potential future changes in tax thresholds. Remember that actual inflation rates may differ.
– Rounding Off: The personal allowance is rounded to the nearest £10, and the basic rate limit to the nearest £100. Additionally, the additional rate threshold aligns with the personal allowance, reducing your PA by £1 for every £2 earned over £100,000.
Use our tax calculator today to understand the implications of the Spring Statement on your finances and plan accordingly.