The Personal Allowance Freeze - Why Some Argue Against Any party that doesn't address increasing taxes on lower incomes

23rd January 2026

The freeze on the personal allowance (the amount of income you can earn before paying tax) is hitting harder year on year. This freeze, currently set until 2030, is often described as a "stealth tax" because although tax rates haven't gone up, inflation and wage growth mean more people are dragged into paying higher taxes over time.

What's Happening
Personal allowance freeze: The threshold (£12,570) has been frozen since 2021 and is due to remain until 2030.

Impact: As wages rise with inflation, more basic-rate taxpayers pay tax on income that would previously have been tax-free.

Stealth tax effect: Government revenue increases without an explicit tax hike, but taxpayers feel squeezed.

Why Some Argue Against Voting Labour (or any party that doesn't address it)
Fairness concern: Basic-rate taxpayers, often middle earners, bear a disproportionate burden.

Cost of living: With food, energy, and housing costs rising, the frozen allowance reduces disposable income further.

Transparency: Critics argue it's misleading to claim "no tax rises" while using fiscal drag to raise revenue.

Shock tactic idea: Voters could withhold support until parties commit to unfreezing or raising the allowance, forcing them to address the issue.

Counterpoints
Fiscal responsibility: Governments argue the freeze is necessary to stabilize public finances after COVID and inflation shocks.

Alternative policies: Some parties may prioritize spending on health, education, or green investment over tax cuts.

Political risk: A blanket refusal to vote for one party may reduce leverage if other parties also support the freeze.

The "stealth tax" through frozen allowances is a real squeeze on basic-rate taxpayers. Some argue that withholding votes is a way to pressure parties into addressing it, while others caution that broader fiscal priorities may take precedence.

Wealth Taxation: The Counter-Argument
Fairness principle: Taxing wealth (assets, property, investments) rather than just income ensures those with significant resources contribute more.

Reducing inequality: Wealth in the UK is highly concentrated — the top 10% hold nearly half of all wealth. A fairer tax system could help redistribute resources.

Alternative revenue: Wealth taxes could raise billions without squeezing basic-rate taxpayers further.

Examples elsewhere:

France and Spain have experimented with wealth taxes.

Scandinavian countries rely more on property and inheritance taxes.

The US debates higher capital gains and estate taxes.

Options Often Discussed in the UK
Reform Council Tax: Replace it with a proportional property tax based on current values.

Capital Gains Alignment: Tax capital gains at the same rate as income, reducing loopholes for the wealthy.

Inheritance Tax Reform: Broaden the base, reduce avoidance, and ensure large estates contribute fairly.

Net Wealth Tax: A direct levy on fortunes above a certain threshold (e.g., £2m+).

Political Context
Labour: Has been cautious, focusing more on closing loopholes and reforming non-dom status rather than introducing a full wealth tax.

Conservatives: Generally oppose wealth taxes, preferring to keep thresholds frozen and focus on spending restraint.

Smaller parties (e.g., Greens, Lib Dems): More open to wealth-based taxation as a fairness measure.

The counter-argument is clear that instead of dragging more basic-rate taxpayers into higher tax burdens through frozen allowances, governments could introduce fairer taxes on wealth. This would shift the burden toward those who can afford it, while protecting middle earners from stealth tax erosion.