Labour’s stealth tax bombshell wipes out April energy bill savings

7 Apr 2026

EMBARGO: Immediate Release

Labour’s stealth tax bombshell wipes out April energy bill savings

New research reveals the £117 energy bill cut will be completely wiped out by April’s stealth tax hit, which will cost taxpayers an average of £180 across regions.
London and the South East are set to be hit hardest by Labour’s "multi-billion pound stealth tax grab", where taxpayers are facing an average hit of £200 or more.
Daisy Cooper MP slams Labour’s tax hikes as being the “continuity Conservatives” that leave families “working harder and harder just to stay afloat” .

New analysis commissioned by the Liberal Democrats has today revealed that this week’s £117 cut to energy bills will be "completely wiped out" for millions of families by Labour’s ongoing stealth tax hikes, as new research lays bare the hit in different parts of the UK from the ongoing freeze to income tax thresholds.

The new House of Commissions Library analysis commissioned by the party shows that income taxpayers will see an average tax hit ranging from £160 to £220 in the 12 months from April, due to the Chancellor’s decision to keep personal tax thresholds frozen, and continuing the stealth tax raid started by the previous Conservative Government. The hit completely erases the £117 energy saving, leaving families significantly worse off.

In the worst-hit regions, the government’s tax threshold freeze will cost households nearly twice the £117 energy bill saving, with people in London and the South East seeing typical tax hikes worth £220 and £200 respectively.

The freezing of income tax thresholds since 2022, originally introduced by the Conservative party and extended by Labour, is set to drag millions of people into higher tax bands.

Rachel Reeves’ decision to keep the income tax thresholds frozen this month will see an estimated 600,000 people brought into the basic rate of income tax, plus an additional 580,000 dragged into the higher 40p rate, across the UK.

This includes 110,000 middle earners in London dragged into the higher rate, more than in any other region.

In the South East 80,000 people are estimated to start paying income tax for the first time, while the North West and West Midlands are expected to see the next highest totals of individuals brought into the 20p rate – at 70,000 in each region.

Liberal Democrat Treasury Spokesperson, Daisy Cooper MP, said:

“People will understandably feel cheated by this Government, which claims it’s helping just as it hammers them with a multi-billion pound stealth tax grab at the same time.

"Rachel Reeves once rightly accused the Conservative party of 'picking the pockets' of working people by freezing tax thresholds, and now Labour is doing exactly the same. These tax hikes show that Labour are just the continuity Conservatives.

"Families across the country are seeing their incomes squeezed - they’re working harder and harder just to stay afloat.

“Rather than a Labour Chancellor who treats every pay rise as a chance for a tax grab, we Liberal Democrats have a plan to get Britain growing again via a closer trading relationship with Europe, to fix our public finances fairly and put an end to the cost-of-living crisis.”

ENDS

Notes to Editors:

The full House of Commons Library research can be found here.

Ofgem confirmed on 25 February 2026 that the energy price cap will fall to £1,641 from 1 April 2026, a decrease of £117 (7%) from the previous quarter.

Originally reported in the Times.