Wefan Gymraeg

Stealth Tax to Cost Welsh Families £500 Million by 2026

The Conservative government’s stealth tax raid will cost the average family in Wales £370 a year by 2026, or a total of £500 million, research commissioned by the Liberal Democrats has revealed.

The figures show the scale of the cost to families of the government’s decision to freeze the personal tax allowance at £12,570 and higher rate tax threshold at £50,270 until 2025/26, compounding the growing cost of living crisis.

The new analysis by the House of Commons Library has found an additional 85,000 people on low pay in Wales will be paying income tax by 2026, while a further 55,000 people in Wales will be paying the higher rate tax bracket, compared to if the threshold had not been frozen. The research is based on modelling using the latest inflation forecasts from the Office of Budgetary Responsibility.

This means that throughout Wales, household disposable incomes are set to be 1 per cent lower in 2025/26 than they would be if there was no freeze to income tax thresholds, or £370 lower per household.

The Welsh Liberal Democrats are demanding that the UK Government drops the planned stealth tax raid to help families cope with rising energy bills and a worsening cost of living crisis. This would mean that the tax thresholds increase in line with inflation, reflecting the growing costs faced by households.

Welsh Liberal Democrat Leader Jane Dodds MS said:

“Boris Johnson and Rishi Sunak must drop this unfair stealth tax that will clobber families who are already feeling the pinch.

“People are worried about the rising cost of living and paying their energy bills this winter. Now they face years of tax rises under a Conservative government that is taking them for granted time and time again.
"Making matters worst the Government is introducing a national insurance tax rise on top of this stealth tax and rapid energy price increases, doing so against the wishes of his own backbenchers in the Conservative Party.
“It is no wonder many lifelong Conservative voters from Aberconwy, to Powys, to Monmouthshire feel this government no longer represents them. Many of them are now turning to the Welsh Liberal Democrats instead."
Welsh Liberal Democrat Leader Jane Dodds MS

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