Tax bill creeping up even when your income hasn’t increased? Then you’re certainly experiencing something called fiscal drag. We’re here to break it down for you in plain English, without all the confusing financial jargon, so that you can loosen up those facial muscles (after reading the first two sentences).

Fiscal Drag Definition

Fiscal drag is closely connected to inflation. When inflation occurs, it pushes individuals into higher tax brackets. As a result, a higher tax rate applies to your income. So, without actually earning more money, you end up paying more tax.

If you’re not sure about what inflation is, read about it more here.

In this I Hate Numbers video, I explain:

  • How fiscal drag works
  • What impact it’s got on you
  • What you need to do to plan for it

Watch to get a good idea about how this impacts your budget. I go into the tax rates by groups in the UK and the changes imminent as of April this year.


To sum up, fiscal drag is really an invisible tax increase that sneaks up on you while you’re not looking. So, next time you feel like your tax bill is mysteriously higher, remember that it might just be a fiscal drag in question.

Now that you’ve familiarised yourself with this, you can take proactive steps to protect your financial well-being in the face of fiscal drag. You’ll want to stay informed and stay savvy. To ensure you don’t find yourself in a situation where you can’t pay taxes, up your business numbers game with our software solution Budgetwhizz. It makes keeping track of your cash flow and financial planning easier. It helps you stay organised so you can focus on what matters to you; the creative work and the impactful change. Take a step away from the chaos with fast setup & easy navigation – numbers just got real…for the better! Get organised & make sense of it all with Numbers Knowhow today!