“Isaac Delestre, an IFS research economist, said inflation’s recent surge was pushing up nominal earnings of many workers and dragging them into the higher tax rate bracket,” Reuters reports.
While a greater proportion of Britons’ earnings will be directed to tax, this does necessarily correspond to an increase in real wages – that tax bracket creep is likely to have a substantial impact on household budgets already under pressure.
“A third of the expected record fall in household incomes this year is likely to be a result of this tax rise,” Reuters quotes the IFS.