HMRC's estimate · edition published 24 Jun 2025
What 1p on the basic rate of income tax raises
The basic rate is the income tax most taxpayers pay on income above their tax-free personal allowance. It is 20% now; this is what raising it to 21% would raise.
HMRC's caveat. Scotland sets its own income tax rates, so they are not included. HMRC allows for people changing how much income they report, and says the size of that response is uncertain.
HMRC's figure is for a change either way, so a 1p cut would lose about as much.
Quote this
HMRC estimates that 1p on the basic rate of income tax (20% to 21%) would raise £6.9bn in 2026-27 and £8.2bn in 2028-29. Source: HMRC, Direct effects of illustrative tax changes, edition published 24 Jun 2025. https://ledgergov.uk/tax/income-tax-basic-rate
Where this comes from
From HMRC's Direct effects of illustrative tax changes, the edition published 24 Jun 2025, the latest (on file as HMRC-DE-2025-06). HMRC's row: “Change basic rate by 1p”.
HMRC works out each figure for a change made at the start of 2026-27, on its own, on the official forecast of the time, and shows each year to 2028-29. It includes how taxpayers respond, where HMRC models it, but no wider effects on the economy. HMRC publishes one figure a year; we show a range of 10% either side of it, our usual band where a source gives none.
See how the numbers are made, or the Autumn Budget 2026 page.