During this parliament higher rate taxpayers set to increase by 2.5 million
18 May 2022
New research undertaken by Lane Clark & Peacock (LCP) partner Steve Webb indicates that the freezing of tax thresholds and faster than normal wage growth will mean millions more people will pay higher rate income tax.
HM Revenue & Customs (HMRC) published figures June 2021, which shows that at the time of the last election in 2019/20 there were 4.3m people paying income tax at the higher rate of 40% or the additional rate of 45%. They also predicted that the number of higher rate taxpayers would increase by around 300,000 people, which is a total of 4.6m people by 2021/22.
The Office for Budget Responsibility: Economic and fiscal outlook report published in March 2022 states: “The income tax personal allowance and higher rate threshold freezes announced in the March 2021 Budget, which mean more income will be subject to tax and a greater proportion of it taxed at the higher rate.”
Steve Webb said, “three more years of relatively rapid wage growth coupled with a freeze on tax thresholds could bring a further 1.5 million people into higher rate tax by the time of the next election, making a total of 2.5 million more over the whole Parliament.”
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