Centre for the Analysis of Taxation
@centaxuk.bsky.social
The Centre for the Analysis of Taxation (CenTax) is dedicated to improving public understanding of tax policy and helping to design a better tax system
centax.org.uk
centax.org.uk
Particularly, while it may feel hard politically to justify raising the threshold at which the Personal Allowance is tapered away & childcare allowances are withdrawn, holding this fixed at £100,000 will have ever worse economic consequences as more people enter this income range.
November 27, 2025 at 4:53 PM
Particularly, while it may feel hard politically to justify raising the threshold at which the Personal Allowance is tapered away & childcare allowances are withdrawn, holding this fixed at £100,000 will have ever worse economic consequences as more people enter this income range.
Freezing this threshold instead allows for a more gradual reversal, giving time for taxpayers to adjust.
The same defence cannot be mounted for freezes to the other Income Tax thresholds...
The same defence cannot be mounted for freezes to the other Income Tax thresholds...
November 27, 2025 at 4:53 PM
Freezing this threshold instead allows for a more gradual reversal, giving time for taxpayers to adjust.
The same defence cannot be mounted for freezes to the other Income Tax thresholds...
The same defence cannot be mounted for freezes to the other Income Tax thresholds...
This historic increase in the Personal Allowance was arguably a mistake, but nominal cuts would be both politically unpopular & create immediate hardship for some through large upfront changes in net income for taxpayers.
November 27, 2025 at 4:53 PM
This historic increase in the Personal Allowance was arguably a mistake, but nominal cuts would be both politically unpopular & create immediate hardship for some through large upfront changes in net income for taxpayers.
But, there's a reasonable case for freezing the Personal Allowance in particular. During the 2010s, it was increased significantly above inflation several times, nominally more than doubling over this period. This is a largely why Income Tax is now so dependent on higher earners.
November 27, 2025 at 4:53 PM
But, there's a reasonable case for freezing the Personal Allowance in particular. During the 2010s, it was increased significantly above inflation several times, nominally more than doubling over this period. This is a largely why Income Tax is now so dependent on higher earners.
The effect is also to increase tax in a way that is less progressive than rate increases of equal revenue, and it creates large increases in marginal tax rates for those close to a threshold.
November 27, 2025 at 4:53 PM
The effect is also to increase tax in a way that is less progressive than rate increases of equal revenue, and it creates large increases in marginal tax rates for those close to a threshold.
➡️ Our view ➡️
There are several economic reasons why a threshold freeze is a bad way to raise Income Tax. The scale of revenue raised is uncertain and arbitrary, depending almost entirely on the future path of inflation: something the government does not control...
There are several economic reasons why a threshold freeze is a bad way to raise Income Tax. The scale of revenue raised is uncertain and arbitrary, depending almost entirely on the future path of inflation: something the government does not control...
November 27, 2025 at 4:53 PM
➡️ Our view ➡️
There are several economic reasons why a threshold freeze is a bad way to raise Income Tax. The scale of revenue raised is uncertain and arbitrary, depending almost entirely on the future path of inflation: something the government does not control...
There are several economic reasons why a threshold freeze is a bad way to raise Income Tax. The scale of revenue raised is uncertain and arbitrary, depending almost entirely on the future path of inflation: something the government does not control...
The extended freeze comes after more than a decade in which thresholds were uprated annually in line with CPI inflation. With thresholds held constant while wages continue to rise, more people are being brought into higher tax bands and are paying more tax as a result.
November 27, 2025 at 4:53 PM
The extended freeze comes after more than a decade in which thresholds were uprated annually in line with CPI inflation. With thresholds held constant while wages continue to rise, more people are being brought into higher tax bands and are paying more tax as a result.
Income Tax thresholds have been frozen since April 2022, and this has now been extended for a further three years to 2030–31 alongside the National Insurance Contributions (NICs) secondary threshold. Previously, these thresholds had been expected to rise again in 2027–28.
November 27, 2025 at 4:53 PM
Income Tax thresholds have been frozen since April 2022, and this has now been extended for a further three years to 2030–31 alongside the National Insurance Contributions (NICs) secondary threshold. Previously, these thresholds had been expected to rise again in 2027–28.
🏘️ Income Tax on property income
💸 Income Tax for dividends
💰 Income Tax on savings
🤝 Employee Ownership Trusts
🚗 EV road pricing
Check out the full report here👇
centax.org.uk/budget-2025-...
💸 Income Tax for dividends
💰 Income Tax on savings
🤝 Employee Ownership Trusts
🚗 EV road pricing
Check out the full report here👇
centax.org.uk/budget-2025-...
Budget 2025 reaction | CenTax
centax.org.uk
November 27, 2025 at 11:04 AM
🏘️ Income Tax on property income
💸 Income Tax for dividends
💰 Income Tax on savings
🤝 Employee Ownership Trusts
🚗 EV road pricing
Check out the full report here👇
centax.org.uk/budget-2025-...
💸 Income Tax for dividends
💰 Income Tax on savings
🤝 Employee Ownership Trusts
🚗 EV road pricing
Check out the full report here👇
centax.org.uk/budget-2025-...
If the increase in Fuel Duty from April 2026 is actually implemented, the govt should be commended. While this staged approach feels more realistic than previous promises, the plan for the forthcoming rise to only begin in April leaves open the possibility of further delay.
November 26, 2025 at 3:59 PM
If the increase in Fuel Duty from April 2026 is actually implemented, the govt should be commended. While this staged approach feels more realistic than previous promises, the plan for the forthcoming rise to only begin in April leaves open the possibility of further delay.
Charging more per electric mile driven without increasing Fuel Duty would further worsen the incentives to purchase EVs. Successive governments kept Fuel Duty frozen in cash terms since 2011, and cut it ‘temporarily’ in 2022.
November 26, 2025 at 3:59 PM
Charging more per electric mile driven without increasing Fuel Duty would further worsen the incentives to purchase EVs. Successive governments kept Fuel Duty frozen in cash terms since 2011, and cut it ‘temporarily’ in 2022.
Other Budget measures are intended to improve EV take up, largely by encouraging businesses to purchase them. However, it is an open question whether these will be enough to offset the demand reduction from a higher cost per mile.
November 26, 2025 at 3:59 PM
Other Budget measures are intended to improve EV take up, largely by encouraging businesses to purchase them. However, it is an open question whether these will be enough to offset the demand reduction from a higher cost per mile.
But - taxing EVs more heavily makes them less attractive relative to petrol & diesel vehicles. A particular problematic for drivers who do not have access to home charging facilities, as prices at commercial facilities already make EV miles more expensive than fossil fuel miles.
November 26, 2025 at 3:59 PM
But - taxing EVs more heavily makes them less attractive relative to petrol & diesel vehicles. A particular problematic for drivers who do not have access to home charging facilities, as prices at commercial facilities already make EV miles more expensive than fossil fuel miles.
It also tackles a long-term fiscal challenge that successive governments have ducked: the gradual erosion of revenue from Fuel Duty as motorists switch to EVs.
November 26, 2025 at 3:59 PM
It also tackles a long-term fiscal challenge that successive governments have ducked: the gradual erosion of revenue from Fuel Duty as motorists switch to EVs.
➡️ Our view
There is a reasonable case to bring EVs into road pricing, to account for the negative consequences on particulate pollution, congestion, and road wear and tear.
There is a reasonable case to bring EVs into road pricing, to account for the negative consequences on particulate pollution, congestion, and road wear and tear.
November 26, 2025 at 3:59 PM
➡️ Our view
There is a reasonable case to bring EVs into road pricing, to account for the negative consequences on particulate pollution, congestion, and road wear and tear.
There is a reasonable case to bring EVs into road pricing, to account for the negative consequences on particulate pollution, congestion, and road wear and tear.
➡️ What's been announced?
Today the Chancellor announced that from April 2028, electric cars will face a new “Electric Vehicle Excise Duty" (eVED) which applies at 3p per mile driven.
Today the Chancellor announced that from April 2028, electric cars will face a new “Electric Vehicle Excise Duty" (eVED) which applies at 3p per mile driven.
November 26, 2025 at 3:59 PM
➡️ What's been announced?
Today the Chancellor announced that from April 2028, electric cars will face a new “Electric Vehicle Excise Duty" (eVED) which applies at 3p per mile driven.
Today the Chancellor announced that from April 2028, electric cars will face a new “Electric Vehicle Excise Duty" (eVED) which applies at 3p per mile driven.
Reforms to Capital Gains Tax, or to the taxation of partnerships would have raised more money, while improving the structure of the tax system and (if this is a goal) being much more progressive.
November 26, 2025 at 3:28 PM
Reforms to Capital Gains Tax, or to the taxation of partnerships would have raised more money, while improving the structure of the tax system and (if this is a goal) being much more progressive.
While this has been presented as a tax on the wealthy, and it certainly is, the impact on the “super-rich” will be much smaller than for the merely affluent. This is because property is only a small share of wealth among the very wealthiest.
November 26, 2025 at 3:28 PM
While this has been presented as a tax on the wealthy, and it certainly is, the impact on the “super-rich” will be much smaller than for the merely affluent. This is because property is only a small share of wealth among the very wealthiest.
Maintaining 1991 values also means that across most houses, barring those above £2 million, the regressive nature of Council Tax remains in place.
November 26, 2025 at 3:28 PM
Maintaining 1991 values also means that across most houses, barring those above £2 million, the regressive nature of Council Tax remains in place.