OBR forecasts extra £17.4bn a year of income tax and NICs revenue by 2030-31 from frozen thresholds

The Office for Budget Responsibility (OBR) said revenues from income tax and national insurance will be £17.4bn a year higher by 2030-31 than it predicted in March, according to figures published alongside Chancellor John Healey's Budget on 28 October 2026¹. The OBR identified rising income tax and national insurance contributions, "especially with personal tax thresholds frozen", as the "single largest driver" of the increase in the tax burden¹.

The government has held the level at which higher rates of income tax start to be paid until April 2031, so as wages rise more people pay more tax on their earnings¹. The OBR also estimated that the threshold freezes in income tax and national insurance from 2022-23 to 2030-31 could reduce labour supply by 215,000 in average-hours equivalent terms by 2030-31¹.

Separately, Healey is raising the rates of tax on income from property and savings by a further two percentage points from April next year¹. That comes on top of an increase of the same size imposed by his predecessor Rachel Reeves, due to take effect at the same time¹.

The OBR forecasts the tax burden, the share of the economy collected in tax, rising from 36 per cent of GDP in 2025/26 to a record 37.9 per cent in 2027/28, then climbing to a peak of 38.6 per cent in 2031/32¹. That compares with 32.9 per cent in 2019/20, before the pandemic, and is the highest level since current records began in 1948¹.

Why it matters for households

The £17.4bn figure is a forecast of higher annual revenue by 2030-31, not a new levy announced in the Budget¹. It reflects the effect of thresholds that stay where they are while pay rises: the point at which higher rates begin remains fixed until April 2031, so more of a pay increase is taxed at the higher rate¹. How this affects any individual depends on their earnings and circumstances, which the OBR forecast does not set out.

The OBR's estimate that the freezes could cut labour supply by 215,000 average-hours equivalent by 2030-31 is a measure of hours worked across the economy, not a count of people leaving jobs¹. The two percentage point rise in tax rates on property and savings income from April 2027 applies on top of the same-sized rise already scheduled from Reeves, so landlords and savers with taxable interest or rental profit face both increases together¹. The OBR's tax burden projections run to 2031/32 and are forecasts, which are revised at each fiscal event¹.

What happens next

The higher rates on property and savings income take effect in April 2027¹. The freeze on the higher rate threshold runs until April 2031¹. The OBR's forecasts will be updated at the next fiscal event; no further dates are given in the report¹.