The Financial Times today reports on new research using our UKMOD tax-benefit model to unpick regional differences in the impact of the Government’s tax policies and the resulting ‘fiscal drag’.

The research by the House of Commons Library uses UKMOD to understand the impact of the Government’s threshold freeze – which has fixed the point when workers begin to pay higher rates of tax – against wage increases for the Cost of Living in London and the South East. They find that another 2 million people will be dragged into paying higher rates of tax as a result of this policy.

Based on estimates from the Government’s Office for Budgetary Responsibility that suggest more than 7 million people in the UK will be dragged into higher tax brackets as a result of the threshold freezes, the Commons library regional analysis using UKMOD finds that 1.1 million in London and the South East will end up in the 40p rate of tax by 2027 and almost 1 million of the lowest paid will find themselves moving into the 20p rate. The Financial Times reports that this impact on working people in the South East could play a key role in the forthcoming General Election where Conservatives risk losing marginal seats.

Read the story in the Financial Times here.

Find out more about UKMOD here