Millions face being pushed backwards, losing more than £500 a year by the end of the decade, as Rachel Reeves’s tax decisions bite, new analysis claims.

The figure is based on an assumption that Rachel Reeves will go ahead with a planned freeze on tax thresholds that was announced in her November budget.

The freeze was brought in by the Conservatives in 2021-22 and extended to 2028, however the Chancellor has announced it will now run through to 2031.

According to analysis by the right wing think tank the Centre for Policy Studies (CPS), workers earning around £50,000 will see their real, post-tax pay fall over the next five years despite expected pay rises and inflation-linked increases.

Once adjusted for forecast inflation and wage growth, post-tax income for someone earning about £50,000 is set to drop from £39,520 to £39,014 – a loss of more than £500 a year in today’s money, they say.

Around seven million people earn more than £50,000, including more than a million in London, meaning the impact will be widespread across professional Britain.

The problem stems from the continued freeze on income tax thresholds. The higher-rate threshold – the point at which earners start paying 40 per cent tax – has been fixed at £50,270 since 2022. Had it risen with inflation, it would now be more than £62,000.

The Office for Budget Responsibility estimates that by 2030 the policy will pull an extra 4.2 million people into paying income tax, with 3.5 million dragged into higher or additional-rate bands.

As a result, the average salaries of nurses, electricians and primary school teachers are on course to breach the higher-rate threshold by 2031. Secondary school teachers, police officers and a worker earning the average London salary will be hit as soon as next year.

By contrast, pensioners and benefit claimants emerge as winners. The “triple lock” on the state pension means millions of pensioners will be £306 per year better off by the end of the same period. Under additional protections dubbed a “quadruple lock”, CPS analysis shows some pensioners will be £537 a year better off by 2031.

The state pension is also set to rise above the tax-free personal allowance next year, meaning income tax would technically apply for the first time. However, Reeves signalled after the Budget that those whose sole income is the state pension would be exempted.

Those claiming the standard rate of Universal Credit will also gain, with payments rising by £290 per year by 2031. The figure will be higher for those receiving additional benefits, all of which are linked to inflation.

Daniel Herring, head of economic and fiscal policy at the CPS, said: “Labour’s tax policy is quietly hammering workers while protecting pensioners and benefit recipients.

“Freezing the personal allowance for income tax will hit everyone, but it’s those who are dragged into higher tax bands who will really suffer – to the point where a worker on £50,000 today is set to actually be poorer in five years’ time, despite getting pay rises.

“Meanwhile, the state pension and universal credit will both be worth more in real terms. This is fiscal drag in action, raising taxes for millions of workers through the back door.”

The Treasury rejected the criticism, pointing to other measures announced at the Budget.

A spokesman said: “In the budget we increased the national living wage and national minimum wage and took £150 off people’s energy bills, extended the freeze on prescription fees [and] fuel duty and froze rail fares for the first time in 30 years. The fair and necessary decisions we made at the budget mean we can deliver on the country’s priorities – cut waiting lists, cut debt and borrowing and cut the cost of living.”

Despite the mounting pressure on middle earners, Downing Street is preparing a renewed push to sell Labour’s economic record. No 10 sources said Sir Keir Starmer would use a series of interventions over the coming days to focus on “highlighting government action so far, including an economic approach which has seen six interest rate cuts and inflation starting to fall”.

The PM has already told the Daily Mirror he would launch an “all-out war on the cost of living”, while his chief of staff Morgan McSweeney has privately described 2026 as the “year of proof”, when voters are expected to finally feel the impact of the government’s policies.