Millions of workers will pay more in tax after Jeremy Hunt confirmed he will keep an extended freeze on income thresholds in place.
The income tax personal allowance - set at £12,570 - is currently frozen until April 2028.
The personal allowance is how much you’re allowed to earn before you start paying tax.
You currently pay the basic 20% rate of income tax when you earn above £12,570, then the higher rate of 40% on earnings above £50,270.
The additional rate of 45% applies when you earn above £150,000 - although this threshold is being reduced to £125,140 from April 6, 2023.
The threshold for when you start paying National Insurance contributions - also £12,570 - is also currently frozen until April 2028.
Workers pay 12% in National Insurance contributions when their salary reaches £12,570, then 2% on earnings over £50,270.
The freezing of tax brackets is known as fiscal drag, which is where the income level at which taxes are collected does not increase in line with inflation or income growth - meaning people are dragged into higher tax brackets.
Jeremy Hunt first announced the move during the Autumn Statement last November, with no change in the decision announced during the Budget yesterday.
Analysis by the Office for Budget Responsibility shows the freezes will add £12billion to the tax taken over the 2023/24 financial year, rising to £29.3billion by 2027/28.
In total, it is expected to add up to an extra £120.4billion for the Treasury.
Some 2.1 million more people are due to be paying the 40% rate of income tax by 2027, while 350,000 more people will pay the 45% rate.
A stealth tax is a form a tax collected in a way that isn’t obvious and often goes unnoticed - but results in people paying more over time.
Christine Cairns, tax partner at PwC, said: “As expected, there were no changes to headline tax rates or allowances despite pressure from some for tax reductions.
“The Chancellor has remained committed to his policy of boosting tax revenues through fiscal drag, particularly from higher earners and investors, and has in fact introduced very few personal tax changes with a few targeted exceptions.”
