People are paying more income tax due to successive governments failing to increase tax in line with inflation, research from RIFT has found.
As it stands, when annual earnings exceed £50,271 taxpayers are subject to a ‘higher rate’ of tax, set at 40%.
there’s been a 42% increase in the number of taxpayers caught in the higher rate tax band from the 2021-22 tax year when the freeze was first implemented until now (2024/25) to 2024-25.
As a result, the number of higher rate taxpayers has increased from 4.43 million to 6.31 million during this timeframe.
Bradley Post, managing director of RIFT, said: “Rising income taxes have been particularly punitive in recent years, as inflation reached double digits between September 2022 and March 2023.
“With this in mind, it’s no surprise that over 42% more people have been pulled into the higher rate band since 2021 and we’ve also observed internally how the freeze on income tax thresholds has pulled more people into the higher rate, who would have previously been subject to the basic rate of tax.
“With Labour pledging to freeze income tax bands until April 2028, many more are set to feel the pinch in the years ahead.”
The Labour Party has committed to freezing income tax bands until April 2028, up from the previous timespan of April 2026.
This means that, while the party hasn’t technically increased income taxes, they will increase by stealth for the next three years.
