Number of taxpayers dragged into paying higher rate soars 15%, figures show
There were 5.1 million higher-rate taxpayers in 2022-23, according to the latest figures supplied by HMRC.
The number of higher-rate taxpayers topped five million for the first time, as a freeze on thresholds saw more earners dragged into the higher tax band, new figures from HM Revenue & Customs show.
In the 2022-23 tax year, there were 5.1 million people paying the higher rate – amounting to 680,000, or 15.3%, more than the previous year.
In comparison, five years earlier, there were 4.2 million people paying the higher rate.
An income tax rate of 40% applies to earnings over £50,271. This threshold has been frozen at the 2021-22 level and will remain in place until April 2028.
Previously, most thresholds were due to rise in line with inflation – but the freeze, introduced by the previous Conservative government, meant more people were dragged into a higher tax bracket if their earnings grew.
HMRC’s figures, which are the most up to date, recognise that so-called “fiscal drag” is behind the latest surge in higher-rate taxpayers.
Higher-rate taxpayers made up 15% of all taxpayers and accounted for 35% of the total amount raised by the Government from income tax in 2022-23.
The number of people paying the additional tax rate also rose to 600,000 in 2022-23 – 9.5% more than the prior year.
The additional rate of 45% is placed on earnings over £125,140.
These 600,000 additional-rate taxpayers made up nearly 2% of all taxpayers and accounted for 34% of income tax raised.
Furthermore, a freeze in the personal allowance threshold – which means income up to £12,750 is not taxed – resulted in 1.5 million more people paying income tax in 2022-23.
Shaun Moore, tax and financial planning expert at Quilter, said: “The impact of the Government’s fiscal drag policy has been laid bare in this morning’s personal income statistics from HMRC,” adding that the increase in overall taxpayers came as “wages climbed while income tax thresholds remained stagnant”.
“The data indicates that higher and additional rate taxpayers, totalling 5.7 million individuals, contributed 68.7% of the UK’s income tax revenue during the period.
“In contrast, 28.2 million basic rate taxpayers and 0.6 million savers rate taxpayers account for the remaining share.
“This highlights the significant role higher earners play in overall tax receipts.
“With income tax thresholds frozen until 2028, this figure is expected to rise as more people’s salaries exceed the higher-rate thresholds.”
