Ndubuisi 'Andy' EgwimMoney Coach for Medics|Ex-NHS GP|21+ Yrs Investor| Founder, MoneyWiseDoctor.com|Helping Medics Avoid Big Money Mistakes

Labour Budget 2024 - Hidden Tax Hike? How Fiscal Drag Affects You

1 Nov 2024 · 1 min

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A YouTube commentary by Ndubuisi 'Andy' Egwim explaining that the 2024–2025 UK personal tax allowances and income tax bands were not changed in the Labour Budget, and warning that this freeze can cause fiscal drag — pushing people into higher tax brackets as nominal incomes rise. The speaker lists the 2024–25 thresholds: personal allowance £0–£12,570 (0%), basic rate £12,571–£50,000 (20%), higher rate £50,271–£125,000 (40%), and notes an effective 60% tax around incomes above £100,000.

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The clue is in these three letters. Cgt. So, capital gains tax number two thing that didn't change. Frozen personal tax allowance. Now, this is where things get a bit tricky. There's been no changes to the personal tax allowance or tax bans, and that's not necessarily good news for us. And why? Because of something called fiscal drag. F, I, S, C, A, L. Fiscal drag. The UK tax ban for 2024, 2025. You start with the personal allowance. So zero pound to 12,570 is taxed at zero percent, no tax. But the basic rate is 12,571 to 50,000. It starts at 20%. Why? For the higher rate, it's from 50,271 to 125,000. It starts at 40%. And remember, above 100,000 is when you start falling into that horrible 60% tax trap.