Stuart Trow, Columnist

The Stealth Tax Buried in Kwasi Kwarteng’s Budget

Liz Truss’s chancellor has preserved a freeze on income-tax thresholds — a decision that could cost UK taxpayers billions of pounds.

September 30, 2022 at 4:00 AM UTC

By Stuart Trow

Stuart Trow is co-host of “Money, Money, Money” on Switch Radio and author of “The Bluffer’s Guide to Economics.” Previously, he was a strategist at the European Bank for Reconstruction and Development.

UK Chancellor of The Exchequer Kwasi Kwarteng.
Photographer: Carl Court/Getty Images Europe

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For all the talk of tax cuts in UK Chancellor of the Exchequer Kwasi Kwarteng’s mini budget last week, the most significant stealth tax imposed by his predecessor Rishi Sunak remains very much in place.

In his spring budget of 2021, Sunak sought to offset the cost of the pandemic with a four-year freeze in income-tax thresholds. Ordinarily, these thresholds rise in line with inflation to preserve the real value of your income. When they don’t, people’s real spending power falls.