A taxi driver from Stafford has described the Chancellor's recent Autumn Budget as a "perfect storm" that threatens to make life "unbearable" for low-earning, self-employed workers like him.
The Budget's 'perfect storm' for a working family
Lee, 34, a self-employed cabbie earning around £20,000 a year, contacted Metro's consumer champion Sarah Davidson after last week's fiscal announcement left him deeply worried about providing for his three children. In the Budget, Rachel Reeves confirmed that income tax and national insurance thresholds will remain frozen at their 2022 levels for a further three years. Simultaneously, dividend tax rates are set to rise, and a new excise duty of up to 3p per mile will be levied on electric vehicle drivers from 2028.
"When I read about what the Government is doing, my heart sank," Lee said. "I find it absolutely disgusting when the government pretends things are fine and it's okay to keep taxing us more and more." He expressed particular frustration at the stealthy nature of threshold freezes, which pull more people into higher tax brackets as wages nominally rise with inflation. "It just feels like a total sham," he added.
Crunching the numbers: A triple financial blow
Expert analysis underscores the scale of the financial pressure facing workers on modest incomes. According to calculations by tax firm Blick Rothenberg, someone earning £20,000 is already almost £600 worse off today than three years ago. By 2031, that shortfall is projected to exceed £1,000 due to fiscal drag.
For the self-employed like Lee, who often use a limited company structure, the increase in dividend tax presents another challenge. From 6 April 2026, the ordinary rate will rise by two percentage points to 10.75%. For Lee, this could mean his annual tax bill on dividends climbing from roughly £650 this financial year to around £806 next year.
The third and perhaps most significant hit comes from the new electric vehicle mileage charge. Set to begin in April 2028, the 3p-per-mile duty will be added to the £195 annual Vehicle Excise Duty already paid by EV drivers. Given that taxi drivers can cover between 25,000 and 45,000 miles annually, the cost will be substantial. Industry publication Taxi Point calculates that a driver covering 45,000 miles would face an additional annual bill of £1,350 from 2028 onwards.
A glimmer of relief amid the gloom
While the outlook appears stark, the Budget did include some mitigating measures. The Resolution Foundation estimates that a typical family will gain £234 between April 2026 and April 2027 from energy support and fuel duty policies. Furthermore, changes to Universal Credit rules mean that from April next year, families can claim child benefit for all their children, not just the first two. For Lee, with three children, this could mean an additional £3,500 per year in household income.
"I hope this gives some comfort and helps you to plan for your future," Sarah Davidson responded to Lee, acknowledging the complexity of individual tax and benefit situations. However, the overall picture for low-income self-employed workers remains one of intensifying pressure, with Lee summarising the sentiment of many: "The last few years have been incredibly tough... it's getting to be unbearable."
