The UK government is considering extending the freeze on income tax thresholds past 2028, raising concerns about the impact on workers. The plan could generate an additional £7 billion annually for the treasury. This move comes amidst predictions of a significant fiscal deficit and in response to rising borrowing costs. Analysis suggests this measure would increase tax burdens on more individuals as their earnings rise, a strategy known as fiscal drag. While this approach is not technically a rate hike, it’s still viewed by economists as raising taxes without changing official rates. The proposal aims to fill a projected £50 billion deficit and avoids increasing income tax rates, National Insurance, or VAT. This option has gained traction due to its relative ease of implementation compared to other potential tax increases. The Office for Budget Responsibility forecasts this freeze could yield an additional £51 billion by the end of the decade. While it’s not yet final, the idea is gaining momentum within the Treasury. Deputy Prime Minister Angela Rayner has been advocating for a similar move to alleviate the growing deficit. Other options include exploring changes to pensions and increasing taxes on gambling companies, with proposals to raise revenue through both these means.