Direct answer first:
If the basic rate of income tax were raised by 1-2 percentage points (e.g.,
from 20% to 21% or to 22%), the typical effect would be an increase in annual
tax bills across the income distribution, with higher absolute jumps for
higher earners. Early press and expert analyses suggest:
- A 1p rise in the basic rate could add roughly a few hundred pounds per year to the typical taxpayer, and modestly more for those nearer the higher-rate threshold.
- A 2p rise could add on the order of several hundred pounds to many taxpayers’ annual bills, with larger absolute increases for those with income near or above the higher-rate band.
- The exact amount depends on earnings, the duration of the change, how thresholds are treated (e.g., whether bands are frozen or adjusted), and interactions with other taxes or targeted offsets.
Context and caveats:
- The figures above are approximate and depend on policy design (e.g., whether a rate increase is matched with National Insurance changes or other tax adjustments), household composition, and existing tax reliefs. If thresholds or allowances are frozen, more taxpayers can drift into higher bands, amplifying the total bill beyond the straightforward rate increase alone.
- In public discussions tied to the 2025 Autumn Budget cycle, proposals around a 2p rise in the basic rate have been linked with potential offsetting measures (such as NI cuts) and with significant revenue aims, but the final policy and exact per-earner impacts would be set by the Budget ordinance.
If you’d like, I can tailor a quick calculation for your own approximate impact given your annual taxable income and any relevant tax credits or reliefs you claim.
