BRITS will be clobbered by tax rises that are £12.5billion higher than predicted because of soaring inflation, top economists have warned.
Rishi Sunak’s decision to freeze income tax thresholds for four years will mean workers pay £20.5billion, the Institute for Fiscal Studies says.
The Chancellor previously said the measure would raise £8billion.
Tom Waters, of the IFS, said: “Usually tax thresholds go up in line with inflation.
“This episode highlights the danger with setting tax thresholds in nominal terms for long periods of time.
“Unexpected changes in inflation can make the size of a planned tax rise much bigger or smaller than expected.”
Robert Colvile, Director of the Centre for Policy Studies, said: “As families face rising energy bills and soaring inflation, the Government must ensure it is not actively making life harder for those on low and average incomes.
“By increasing the National Insurance threshold for workers, the Government can alleviate some of the cost of living pressures and allow households a small degree of respite.”