Vulnerable taxpayers face growing risks as the continued freeze on the personal allowance is expected to push around 780,000 low-income earners into the tax system by 2029/30.
Many will be people earning only slightly above the minimum wage, often working zero-hours contracts or combining multiple part-time roles. For individuals already balancing essential living costs, entering the tax system introduces new financial and administrative pressures.
Demand for support is already rising. TaxAid has reported a 58% increase in demand over the past three years, assisting more than 18,000 people last year alone. The threshold freeze is likely to accelerate this trend. According to the Office for Budget Responsibility, the personal allowance would otherwise be almost £5,000 higher by 2030/31, effectively increasing tax liabilities for lower earners.
Existing taxpayers are also affected, as wage increases gradually push them into higher tax bands while thresholds remain unchanged. Pensioners face particular challenges. By 2027/28, the full new state pension is expected to exceed the personal allowance, potentially leaving some pensioners with unexpected tax bills and complex assessments, particularly those with health or accessibility needs.
The rollout of Making Tax Digital (MTD) adds further pressure. From April 2026, self-employed individuals and landlords earning over £50,000 must submit quarterly digital updates, with the threshold reducing to £30,000 from April 2027. Many vulnerable taxpayers lack digital skills or reliable internet access, increasing the risk of non-compliance and unexpected tax debts.
Additional measures, including higher property tax rates from 2027, may indirectly increase living costs if landlords pass on higher tax burdens through rent rises.
However, some reforms offer support. Proposed loan charge resolution measures and stronger action against tax avoidance promoters represent positive steps towards protecting vulnerable taxpayers from unfair financial hardship.