As you are likely to be already aware, both income tax and national insurance contribution rates have been frozen for 2021 to 2022. We expect that this will remain the case until the end of this Parliament in 2024.

However, the choice to freeze the personal allowances and tax bands at their 2021 to 2022 rates means that the Chancellor is causing the value of these to diminish by inflation.

In other words, if the taxpayer increases their income or profits over this period, more of their income will be taxed at a higher rate. As a result of this, the taxpayer will end up paying more tax even though the rates have not changed.

The same approach of freezing rates has been used in the past. For example, since 2009, the inheritance tax rates have been frozen while the value of property subject to that tax has increased significantly. This has resulted in more deceased estates becoming liable to pay inheritance tax.

Along with the income tax and national insurance contribution rates, the capital gains tax-exempt amounts and rates have also been frozen until 2021-2022. The Chancellor has confirmed that these will be fixed for the foreseeable future.