- Nearly two million more people in the UK have been drawn into the higher-rate income tax band since the start of the decade, with 5.76 million individuals paying the higher rate in 2023/24.
- This represents a 50 per cent increase from 3.83 million in 2019/20, primarily due to the higher-rate tax threshold being frozen at £50,271 since 2021/22 while incomes have risen.
- The government has extended the freeze on tax thresholds, including the personal allowance and higher rate, until 2030/31, which is expected to pull even more people into higher tax brackets through 'fiscal drag'.
- Higher-rate taxpayers now account for 15.7 per cent of all UK taxpayers and contribute 32% of the total income tax collected by the government.
- Experts have labelled the frozen thresholds as a 'stealth tax' and advise individuals to utilise financial tools such as pensions and ISAs to manage their tax liabilities.
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