A MILLION extra people will be dragged into paying income tax if Rachel Reeves presses ahead with a stealth rise, a report reveals.
Pensioners and minimum wage earners face being hit if the Chancellor freezes tax thresholds for a further two years.
The move on both income tax and national insurance would help bring £8.3billion into Treasury coffers, the Institute for Fiscal Studies says.
But 960,000 people whose income creeps up just to keep pace with inflation would pay more tax.
And the number of income tax-payers in families entitled to Universal Credit would rise to 3.1million — 110,000 more than under the current policy.
Labour had promised not to raise key taxes or extend the threshold freeze.
READ MORE ON RACHEL REEVES
But Ms Reeves, who yesterday took a selfie with PM Sir Keir Starmer as they visited engineering students in Bangor, North Wales, is looking to fill a £30billion financial black hole.
Last night, Shadow Chancellor Mel Stride said: “This would take money from hardworking people to pay for more and more welfare spending.”
Currently, there is a personal allowance — the amount that can be earned before income tax kicks in — of £12,570.
Anyone, including pensioners or those on the minimum wage, will then pay tax on the sum above that allowance at 20 per cent, up to £50,271.
At that point a higher rate of 40 per cent comes into play.
Income tax bands used to go up with inflation, but have been frozen since 2022-23.
Extending the cap would see minimum wage workers paying tax after doing just 18 hours per week — the lowest number to date.
People on £20,000 would be paying £282 more tax each year by April 2028.
Meanwhile, the full new state pension will exceed the personal allowance in 2027/28.
A Treasury spokesman last night insisted: “We will deliver a Budget that boosts growth and cuts the cost of living.”
