9 million to be hit by Conservative-Labour stealth tax “stitch up”

23 Nov 2025

EMBARGO: 22:30 Sunday 23rd November

9 million people will have been dragged into higher rates of tax by 2030 due to the freezing of tax thresholds by Labour and the Conservatives, new analysis by the Liberal Democrats has revealed.

The Liberal Democrats will today launch an attack ad accusing both the main parties of a “stealth tax stitch up,” arguing that Labour and the Conservatives are squabbling while families are "milked for their hard-earned cash.”

The Liberal Democrats added that it would be “rank hypocrisy” if the Chancellor goes ahead with extending the Conservative stealth tax by another two years at the Budget on Wednesday. In 2023, Rachel Reeves said the then Conservative government’s decision to freeze income tax thresholds amounted to “picking the pockets” of working people.

The Liberal Democrat research, based on the latest OBR figures and previous Commons Library analysis, shows that an extra 1.3 million will be dragged into a higher rate if the Chancellor goes ahead with extending the threshold freeze through 2029-30. This is on top of the 7.7 million already on track to be dragged into a higher tax band by the stealth taxes introduced by the Conservatives since 2021.

The analysis shows that the total stealth tax bombshell will reach £55.9 billion a year by 2029-30, of which £7 billion will be due to Labour, with the rest having been caused by the Conservatives.

Liberal Democrat Treasury Spokesperson, Daisy Cooper MP, said:

“A staggering 9 million people are now set to be hit by the Conservative–Labour stealth tax stitch-up.

“Rachel Reeves once accused the Conservatives of ‘picking the pockets’ of working people by freezing tax thresholds — now Labour plans to do exactly the same. That’s rank hypocrisy. While the two big parties squabble, it’s ordinary Brits who are left footing the bill.

“Families across the country are fed up with being milked for their hard-earned cash. The Liberal Democrats would grow the economy and put money back in people’s pockets with our plan to cut energy bills, rescue high streets and rebuild trade with Europe.”

ENDS

Notes to Editor:

Rachel Reeves’ previous comments on the Conservative stealth tax can be found here.

OBR March 2025: As things stand, the current version of the stealth tax which ends in April 2028 (put in place by the Conservatives) will drag 7.7 million people into a higher tax band by 2029-30:

4.2m into basic rate
3.5m into higher rate

OBR, March 2025 EFO, Detailed forecast tables - receipts, Table 3.19

House of Commons Library: Extending the stealth tax by two more years (until April 2030) will drag an additional 1.3 million people into a higher tax band, by 2029-30:

609,000 into basic rate
694,000 into higher rate

Library research: Stealth tax two year extension Sep 2025 REQ-00889111.docx

Therefore, the Conservatives & Labour will have together dragged 9 million peopleinto a higher tax band by 2030:

4.9m into basic rate
4.2m into higher rate

Combined tax hit:

Extra £48.9bn a year by 2029-30 due to the Conservatives [OBR table 3.18 - see below]
Extra £7bn /yr by 2029-30 due to Labour [House of Commons Library - see above]
Extra £55.9bn /yr by 2029-30 in total
These figures include the net increases in personal tax revenues - i.e. income tax and National Insurance.