‘I’m reducing my hours’: fiscal drag’s impact in the cost of living crisis

Higher earning families are reporting ‘a loss of funded childcare hours’. Photograph: supersizer/Getty Images

Guy Eyres, 77, a pensioner from Llandudno, Wales, is one of millions of Britons who have been affected by fiscal drag – the stealth taxation of income via the freeze on thresholds in place since 2021.

The UK government’s decision not to raise income tax thresholds in line with inflation despite a surging cost of living crisis has been lucrative for the Treasury: the OBR estimates the move will raise an additional £26bn by 2028.