Nearly 2.6 million people in London and the South East will have been dragged into paying higher rates of income tax if as expected Rachel Reeves extends the freeze on thresholds for another two years.

The Chancellor is set to continue the “stealth tax” policy first introduced in 2022 by Rishi Sunak, when he was at the helm of the Treasury, until 2029/30.

The 20% basic rate of income tax is paid on income from £12,571 to £50,270, and the 40% higher rate on income from £50,271 to £125,140.

Freezing the thresholds mean more people are dragged into paying income tax for the first time, or the higher rate, as their wages rise.

In London, there are due to be 700,000 more higher rate payers by 2027/28 under the six-year Tory freeze, with a further 110,000 if Ms Reeves extends the policy

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