2m more people face higher tax rates since 2019

HMRC figures show that nearly 2m people have been dragged into the higher and additional rates of tax over the past three years. It is forecast that 6.1m people will be paying income tax at 40% or 45% in 2022/23. There are a projected 5.5m higher rate income taxpayers in 2022/23 – a 43.9% increase on 2019/20. The projected 629,000 additional rate income taxpayers equate to a 49.4% increase from 2019/20. HMRC data shows that overall there were 31.5m income taxpayers in tax year 2019/20, with this projected to increase to 34m in 2022/23. Sir Steve Webb, a partner at LCP and a former pensions minister, said: “Paying higher rate tax used to be reserved for the very wealthiest, but this has changed very dramatically in recent years.” “The starting point for higher rate tax has not kept pace with rising incomes, and the current five-year freeze on thresholds has turbo-charged this trend,” he added.

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