Philosophical perspective
After years of stagnant prior wage growth, rocketing housing costs, and a recent period of double-digit inflation, they are unlikely to feel flush with cash.
And with income tax thresholds frozen for the next few years, the ‘tax cut’ starts to look only like a good deal over the next calendar year; purely coincidentally when the election will most likely be held.
Pay will continue to rise; income tax thresholds will not. As our worker’s pay continues to increase, more and more of it will be swallowed up by higher tax rates, more than negating the effect of the NI cut by the time they get to 2029.
But depending on your philosophical perspective, you could reasonably contend that the typical full- time employee’s disposable income in England and Wales will rise by 7.3 per cent (or 2.7 per cent inflation-adjusted) over the next year.
You can also contend that the typical employee’s tax burden has fallen by just 0.2 percentage points, but will steadily increase over time, and that inflation remains more than double the target rate.
Both positions are true.
Charles Archer is a freelance financial analyst
