The decade-long freeze: inflation is now your tax collector

Income-tax and National Insurance thresholds are frozen until April 2031 — a full decade. As pay rises with inflation, more of it crosses fixed thresholds, so your tax bill grows even when your spending power does not. This "fiscal drag" is the single biggest revenue-raiser in play, and it works precisely because there is no headline rate rise to notice.

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Pensions: from tax shelter to estate liability

From 6 April 2027, unused pension funds fall within inheritance tax. For decades a pension passed outside the estate; now it can be taxed at 40% on death. That reverses the old logic of leaving the pot untouched for heirs — for many, drawing it down sensibly through retirement becomes the smarter route.

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The 60% trap between £100,000 and £125,140

Earn in this band and your personal allowance is withdrawn £1 for every £2 — creating a 60% marginal rate, higher than the 45% paid by those earning far more. Parents lose tax-free childcare on top once adjusted income passes £100,000, sharpening the cliff edge.

The +2% surcharge on asset income

Dividend rates rose 2% from April 2026. From April 2027, new separate rates apply to property and savings income — a basic rate of 22%, higher of 42% and additional of 47%. Note the detail: for property and savings the additional rate does rise to 47%, so higher earners are squarely in scope; only the dividend additional rate is left unchanged.

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Empty and second homes: council tax up to 4×

Since April 2024 an empty-home premium can apply after just one year — +100% (double), rising to +200% after five years and +300% after ten. From April 2025, furnished second homes can be charged +100%. Properties mid-refurbishment or between tenancies increasingly get caught.

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The new high-value council tax charge

From April 2028, a "high value council tax charge" applies on top of normal council tax — £2,500 a year on homes worth £2m–£2.5m, scaling to £7,500 a year on homes over £5m. A standing annual charge on prime property, separate from any sale.

Inheritance tax and the frozen bands

The £325,000 nil-rate band and £175,000 residence band are frozen to 2031 too, while property and investments keep rising — pulling ever more estates into the 40% charge. Agricultural and business property relief is also capped at £1m combined from April 2026, exposing many farms and family businesses for the first time.

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