The tax thresholds frozen since the 80s – this is what they should be by now

Allowances could be four times higher if they had kept pace with inflation, according to analysis

Frozen piggy bank
The tax thresholds frozen since the 80s – this is what they should be by now
(Image credit: Getty Images)

Feeling the pinch of tax thresholds creeping around your savings and investments? Little wonder – new research has found some have been frozen for almost half a century at the same level.

These allowances could have been four times higher if they’d kept pace with inflation, according to calculations by investment platform interactive investor.

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Frozen since

Frozen for

Current threshold

Should be

(if adjusted by inflation)

Difference

IHT annual gifting allowance

April 1981

44 years

£3,000

£11,529

£8,529

IHT nil rate band

April 2009

16 years

£325,000

£517,007

£192,007

Income tax additional rate threshold

April 2010

15 years

£125,140

£231,000

£105,860

Income tax 60% tax trap

April 2010

15 years

£100,000

£154,789

£54,789

Savings allowance: Basic rate

April 2016

9 years

£1,000

£1,368

£368

Savings allowance: Higher rate

April 2016

9 years

£500

£684

£184

Residence nil rate band

April 2020

5 years

£175,000

£221,633

£46,633

Income tax basic rate threshold

April 2021

4 years

£12,570

£15,517

£2,947

Income tax higher rate threshold

April 2021

4 years

£50,270

£62,059

£11,789

Laura Miller

Laura Miller is an experienced financial and business journalist. Formerly on staff at the Daily Telegraph, her freelance work now appears in the money pages of all the national newspapers. She endeavours to make money issues easy to understand for everyone, and to do justice to the people who regularly trust her to tell their stories. She lives by the sea in Aberystwyth. You can find her tweeting @thatlaurawrites