The recent announcement of income tax threshold freezes and reductions promises to hit workers in London and the South East hard, pushing hundreds of thousands into higher tax brackets and further squeezing their already overstretched disposable incomes. Official figures reveal that these policies will force nearly 550,000 Londoners into paying the higher 40p income tax rate by the 2027/28 tax year, a stark example of how the government’s misguided fiscal drag is constricting the finances of ordinary taxpayers.

This shameless freeze on thresholds is expected to add up to 1.1 million more taxpayers across London and the South East, illustrating how the Treasury is effectively banking on ordinary families paying more without a clear mandate or accountability. With inflation eroding earning power, millions will be compelled to shoulder higher tax burdens, with around 750,000 individuals across these regions already set to face increased taxes by 2025/26. This is nothing short of a stealth tax increase, siphoning off hard-earned income to fund a government unwilling to curb its reckless spending.

Official government data confirms that income tax contributions from London and the South East now surpass £100 billion annually, a record high, highlighting how these policies disproportionately hit those on middle and lower incomes, including key workers like police officers, teachers, and nurses. Alarmingly, over 900,000 such public service employees are projected to be caught in this fiscal drag by 2028, underscoring a government that appears more intent on raising revenue than protecting vital public services.

This worsening tax burden is driven by a phenomenon known as "fiscal drag," where inflation and threshold freezes push taxpayers into higher rates despite no official rate increase. Currently, over a million Britons are paying the top 45% income tax rate, yet this is just the tip of the iceberg, as millions face higher brackets purely because of government inaction and inflation. Far from fair, these policies are punishing those who strive to earn their living and contribute to society.

While government figures misleadingly claim that London households might see a slight average disposable income increase of £110 this year, thanks to some National Insurance cuts, the reality for much of the South East tells a different story. Residents, especially in commuter belts and outer London, are set to lose an average of £1,580 annually by 2027/28 due to frozen thresholds and rising costs, deepening financial pressures on families already struggling to make ends meet.

These tax policies reveal a government out of touch with the economic realities faced by hardworking middle earners. Instead of easing the burden, their actions are driving up taxes on the very people who keep the economy ticking, public sector workers and everyday families, while fostering frustration and insecurity. It's clear that without serious reform and a rejection of these destructive fiscal policies, the future looks increasingly bleak for ordinary taxpayers.

Source: Noah Wire Services