Most people compare tax years to answer one question: did the latest Budget leave me better or worse off? The calculator above answers it for any salary. But year-on-year comparisons hide the slowest and most expensive change of all, because it doesn't happen in any single Budget. It happens every year that tax thresholds stay where they are while wages and prices rise.
What "frozen" means in practice
The Personal Allowance has been £12,570 since April 2021, and the higher-rate threshold has been £50,270. Under current policy both stay frozen until April 2031. Normally these thresholds rise with inflation each year. When they don't, any pay rise that just keeps pace with prices pushes more of your income into tax, and more people into the higher-rate band. Economists call this fiscal drag.
The effect is easiest to see by holding a salary still. Someone earning £35,000 takes home exactly the same in 2026/27 as they did in 2024/25: about £28,720. Nothing about their tax has changed. But prices have risen over those two years, so the same take-home pay buys less. Fiscal drag is the reason a pay rise that matches inflation still feels like falling behind: the rise is taxed, but the thresholds aren't uprated to match.
A worked example: what an indexed allowance would be worth
To put a number on it, imagine the Personal Allowance had risen by a modest 3% a year since it was frozen. After five years it would be about £14,572 rather than £12,570. For a basic-rate taxpayer, the extra £2,002 of tax-free income would be worth about £400 a year in lower income tax. Higher-rate taxpayers lose more, because the frozen higher-rate threshold also pulls part of their income from 20% into 40%. The real inflation over these years has been higher than 3% in some of them, so this illustration understates the true cost.
Why some years still looked better
Not every change has gone the wrong way. Employee National Insurance has been cut sharply. In 2022/23 the main rate was as high as 13.25% for part of the year, compared with 8% now. That's why the same £35,000 salary takes home about £28,720 today, against about £27,542 under the 2022/23 rates in the calculator. For many basic-rate employees, the National Insurance cuts have offset several years of fiscal drag. For higher-rate taxpayers they offset less, because National Insurance above £50,270 was only 2% to begin with.
Judging your own pay rise
A practical test is to compare your take-home pay this year with last year's, adjusted for inflation. If your take-home rose by less than prices, you've lost ground, even if your gross salary went up. The calculator above shows the take-home change between any two tax years at the same salary. Run it twice, once at last year's salary under last year's rules and once at this year's salary under this year's rules, and compare the difference with the inflation rate.
If you're close to a threshold, fiscal drag matters even more. Each year, more pay rises push people over £50,270, £60,000 for the Child Benefit charge, or £100,000 for the loss of the Personal Allowance. Thresholds that don't move are easier to plan around than ones that do. Pension contributions and Gift Aid can keep you below each line.
Next steps
Enter your salary above and pick any two tax years from 2022/23 to 2026/27. To see how your current pay breaks down, use the main take-home pay calculator. If a rise is about to take you over a threshold, the £100k tax trap and Child Benefit charge calculators show what you can do about it.