Millions more UK workers are paying higher rates of income tax because income tax thresholds have been frozen since 2021, according to newly published government figures. The article says this has pulled many people into higher bands through “fiscal drag”, where wages rise but tax thresholds do not, meaning a larger share of earnings is taxed at higher rates. It matters because it increases the tax burden on ordinary earners while significantly boosting Treasury revenues without headline tax rate rises.

The number of higher-rate taxpayers is projected to rise from 4.43 million in 2021/22 to 7.7 million in 2026/27, an increase of 3.3 million, while additional-rate taxpayers are expected to increase from about 500,000 to 1.29 million. Over the same period, income tax receipts are forecast to climb from £226 billion to £347 billion, a £121 billion increase, and the number of basic-rate taxpayers is projected to grow from 27.4 million to 31.4 million. The higher-rate threshold remains at £50,270, while the additional-rate threshold was frozen at £150,000 before being reduced to £125,140 in 2023/24.