With Saywah Mahmooddata journalist

Lowri Williams is struggling to cover basic expenses. He says he earns a low income with little support and feels like he’s “getting by poorly” and barely getting by.

He is one of a large group of people caught in a precarious situation living in low-income households, earning too little to support themselves comfortably but too much to qualify for significant financial aid.

For people like Lowri, working harder or earning a higher income could mean losing vital support like Universal Credit, leaving them no better off, and in some cases even worse off.

Lowri’s salary is not high enough to pay taxes. But there is a larger low-income group that faces a heavy tax burden.

Sky News analysis found that over the last three years, working people in the bottom 25% of earners have effectively had a tax increase of 60%.

This is due to the freeze on personal allowances that was introduced in 2021 and is scheduled to end in 2028. For each year the freeze goes into effect, income earners see their tax rates increase in real terms as a larger portion of their income becomes taxable.

Labor could extend its budget freeze this week. If the Chancellor goes ahead with the plan, around 400,000 people currently exempt will find themselves paying income tax, with many existing taxpayers paying higher rates.

Moreover, low- and middle-income households are experiencing a significant stagnation in their income growth, according to the Resolution Foundation’s analysis of Department for Work and Pensions (DWP) data.

The finding is part of a report obtained by Sky News in November that will take a deeper look at the financial pressures these households face.