Fuel and travel costs are pushing prices up again
Thursday 5 November 2026
Inflation has risen to 3.1%, meaning everyday spending is getting more expensive just as household budgets are already under pressure.
Key term
What it means
Income Tax works in steps. The first part of your income may be tax-free. The next part is taxed at one rate, and income above that may be taxed at a higher rate. These steps are called tax bands. Your marginal Income Tax rate is the rate that applies to your next pound of income that is subject to tax. It does not mean all your income is taxed at that rate. National Insurance and changes to benefits can also affect how much of an extra pound you keep.
Example
Imagine these made-up tax bands: the first £10,000 is tax-free, the next £10,000 is taxed at 20%, and anything above £20,000 is taxed at 40%. If your pay rises from £20,000 to £21,000, you pay 40% tax on the extra £1,000: that's £400. The first £20,000 is still taxed at the lower rates.
Why it matters
A pay rise that takes you into a higher tax band does not normally make your whole income subject to the higher rate.
Related terms
-
Effective tax rate
The total tax someone pays, shown as a percentage of the income or other amount being measured.
Read more -
Fiscal drag
When rising incomes lead to more tax because tax-free amounts or tax thresholds have not kept up.
Read more -
Personal allowance
The amount of income most people can receive in a tax year before paying Income Tax on it.
Read more -
Progressive tax
A tax under which people with more income pay a larger share of it in tax.
Read more
Keep in the loop
News
Highlights from about the UK economy, the UK government and the UK public sector.
Mortgage relief will have to wait a little longer
Wednesday 4 November 2026
Interest rates are staying at 3.75%, so households with mortgages and other borrowing may have to wait longer for costs to come down.
Energy bills are going up as winter approaches
Wednesday 4 November 2026
A higher energy price cap means many households will be paying more to heat and power their homes during the colder months.
Guides and insights
Analysis
Clear, accessible analysis of the economic issues shaping everyday life
Living standards
What does a day’s work buy?
Comparing the cost of everyday life across generations, from bread and beer to buying a home.
Food & prices
The journey behind your grocery bill
How farming, energy, transport and supermarket competition shape the price on the shelf.
Prices & inflation
Inflation is falling. What happens next?
What slower price rises mean for wages, purchasing power and economic recovery.
Shared prosperity
What would shared prosperity look like?
Beyond GDP: how we could measure economic success through security, opportunity and living standards.
Let's work together
Get in touch
We're looking to work with individuals and organisations who can contribute funding, expertise, data, technology, or strategic connections to help build better economic tools and research.