Truss tax: Mortgage rise since mini Budget equivalent to 5p income tax hike

EMBARGO: Immediate Release

The hit to families from soaring mortgages since Liz Truss’ mini Budget is equivalent to a 5p income tax hike, new analysis by the Liberal Democrats has revealed.

The party said it showed families are paying a “Truss tax,” and that the former Prime Minister’s comments blaming others such as the Bank of England OBR for the economic misery she caused are adding “insult to injury.”

According to the Bank of England, a typical mortgage borrower coming off a fixed rate will see monthly mortgage payments rise by around £240, or around 39%. That amounts to a rise in mortgage payments of £2,880 over a year.

This increase is equivalent to a 5p rise for a typical household with one higher rate and one basic rate taxpayer, who would face a combined tax hike worth £2,882 a year.

Liberal Democrat Treasury Spokesperson Sarah Olney MP said:

“Liz Truss blaming others for the economic chaos she caused will just add insult to injury for families suffering from soaring mortgage costs.

“Millions of families are paying a Truss tax worth thousands of pounds a year, because the Conservatives crashed the economy and sent mortgages spiralling.

“Rishi Sunak is too weak to kick Liz Truss out of the Conservative Party despite the conspiracy theories she is peddling, and too out of touch to understand the economic hardship people are going through. It just shows the Conservative Party has lost touch with reality and deserves to be kicked out of office as soon as possible.”

ENDS

Notes to Editors:

Full analysis on equivalent tax hike is available here.

“For the typical owner-occupier mortgagor rolling off a fixed rate between 2023 Q2 and the end of 2026, their monthly mortgage repayments are projected to increase by around £240, or around 39% (Bank of England Financial Stability Report, December 2023).

Example household:

A household made up of one higher rate taxpayer and one basic rate taxpayer earning £32,500, currently pays £11,526 in basic rate income tax, levied at 20%. After a 5p rise in the basic rate (26%) they’d pay a combined £14,408. That’s an extra £240 a month.