Inflation Calculator UK
See how UK inflation has reshaped the value of money, how a future salary erodes in real terms — and, most importantly, how the frozen £12,570 Personal Allowance and £50,270 higher-rate threshold quietly raise your real tax bill every year until April 2028.
Comparing 2000 prices to 2024 using ONS CPIH (D7BT). CPIH annual averages range from 1989 to 2024.
Source: ONS Consumer Prices Index including owner-occupiers' housing costs (CPIH), series identifier D7BT, annual averages (2015 = 100).
The freeze is the real story
Headlines talk about "inflation" as if it only affects shopping baskets. For UK taxpayers, the bigger story is fiscal drag. Rishi Sunak froze the Personal Allowance and higher-rate threshold in March 2021; Jeremy Hunt extended the freeze to April 2028 in November 2022. Labour has not reversed it. The result: every year that your pay tracks inflation, more of your income crosses thresholds that haven't moved.
The £12,570 Personal Allowance has been unchanged since April 2021. CPIH has risen roughly 20% over the same period. The £50,270 higher-rate threshold (the point at which you start paying 40% in England, Wales and Northern Ireland) has likewise been stuck since 2021. The £100,000 Personal Allowance taper and the £50,000 HICBC Child Benefit threshold are frozen too (though the HICBC now tapers up to £80,000 after reforms in April 2024).
The Fiscal Drag tab above lets you quantify the damage for your own salary. Enter your income, pick an inflation assumption, and the calculator uses the 2025-26 income-tax bands held constant across the freeze window. It returns the extra real-terms tax you pay every year — the pounds of purchasing power the Treasury is silently removing from your pocket.
How to use each tab
Purchasing Power
Enter an amount and a past year. The calculator uses the ONS CPIH annual average index (identifier D7BT, 2015 = 100) to translate it into 2024 purchasing power. £1 in the year 2000 was worth roughly £1.80 today; £1 in 1990 closer to £2.30. Use it to sense-check old salaries, house prices, or "in my day" claims.
Salary Erosion
Separate your nominal pay rise from the inflation rate. If your raise matches CPI, your real pay is flat. If inflation outpaces your raise — as it did for most UK workers through 2022 and 2023 — real pay falls even as the number on your payslip goes up. The chart plots nominal and real trajectories side by side.
Fiscal Drag
The headline UK use case. Enter your current income, assumed CPI, and the length of the freeze window (up to April 2028 is four years from 2024-25). The calculator projects your income year by year, taxes each nominal amount using 2025-26 bands, and then expresses the resulting tax in today's pounds so you can see the real cost. If inflation is high enough to push you across the £50,270 higher-rate threshold, the calculator flags it.
Frequently asked questions
What is CPIH and why use it instead of CPI or RPI?
CPIH is the ONS's preferred measure of consumer price inflation. It is CPI plus owner-occupiers' housing costs. RPI is no longer a National Statistic and tends to overstate inflation. CPI ignores housing. CPIH sits in the middle and is what the ONS uses for most headline reporting.
Are the thresholds really frozen until 2028?
Yes. The Personal Allowance (£12,570) and basic-rate limit (so the £50,270 higher-rate threshold) are frozen in cash terms until the end of tax year 2027-28. The £100,000 taper and £50,000 HICBC are also frozen. The Labour Government has not reversed these freezes.
Does the calculator include NI and student loans?
No. The Fiscal Drag tab is income tax only. NI thresholds are also frozen to 2028, so total fiscal drag on a payslip is higher. Use the Take-Home Pay calculator for a full net-pay projection.
What inflation rate should I assume?
The Bank of England's target is 2%. CPIH averaged above 4% through 2022–24. A 2.5%–3.5% range is reasonable for a four-year projection of the remainder of the freeze window.
Does Scotland have different frozen thresholds?
Scotland sets its own income-tax bands, which have been largely frozen in cash terms year-on-year too. The £12,570 Personal Allowance is UK-wide and reserved to Westminster, so the freeze applies to Scottish taxpayers identically. Toggle the Scotland option in the Fiscal Drag tab to use Scottish bands.
How accurate are the CPIH figures?
The calculator uses published ONS annual averages of CPIH (series D7BT, 2015 = 100) from 1989 to 2024, rounded to one decimal place. For precise single-month comparisons, use the ONS Inflation Calculator on the ONS website.
Why is my pay falling in real terms even with a raise?
Because inflation compounds. If inflation is 4% and your raise is 2%, real pay falls about 2% that year. Five years at that gap is roughly a 10% cumulative real-terms cut. The Salary Erosion tab shows the divergence explicitly.
Sources
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