Chancellor of the Exchequer Rachel Reeves (Image: Anadolu, Anadolu via Getty Images)
Almost two million people across the UK have been pushed into the higher-rate income tax bracket since the beginning of the decade, fresh figures reveal. A total of 5.76 million taxpayers were liable for the higher rate during the 2023/24 tax year, according to HM Revenue and Customs.
This represents a 50% increase from 3.83 million in 2019/20. Some 654,000 people were added to the higher-rate bracket between 2022/23 and 2023/24, a year-on-year surge of 13%. HMRC recognised the increase is “likely to be due to the unchanged higher rate threshold and increases in income, largely from employment, resulting in more taxpayers being brought into the higher rate of tax.”
The threshold at which people begin paying the higher rate of income tax of 40% has remained frozen at £50,271 since 2021/22. Tax thresholds traditionally used to increase in line with inflation, but the freeze – implemented by the previous Conservative government – has resulted in more people being pulled into the higher bracket as their wages have risen.
Chancellor of the Exchequer Rachel Reeves confirmed at the Budget in November 2025 that the freeze will remain in place until 2030/31, meaning additional people are expected to experience so-called “fiscal drag” and find themselves liable for the higher rate. HMRC’s figures demonstrate that higher-rate payers accounted for 15.7% of all UK taxpayers in 2023/24, nearly one in six, up from 12.2% in 2019/20, or approximately one in eight. Higher-rate taxpayers accounted for 32.0% of the total revenue collected by the Government through income tax in the year to March 2024. There were 29.40 million basic rate taxpayers in 2023/24, up nearly three million from 26.50 million in 2019/20.
The number of basic rate taxpayers rose by 1.15 million between 2022/23 and 2023/24. HMRC said this rise was “driven by the personal allowance remaining unchanged at £12,570 alongside rising incomes, which has increased the amount of income taxed at the basic rate and brought more individuals into paying income tax”.
Tax is paid to HMRC (Image: coldsnowstorm via Getty Images)
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A freeze on the personal allowance threshold – meaning income up to £12,750 remains untaxed – has been in place since 2021/22 and is set to continue until 2030/31. Basic-rate payers contributed 29.9% of the total revenue gathered by the Government in 2023/24, marginally below the 32.0% figure recorded for higher-rate payers.
The number of people paying the additional rate of income tax surged considerably year-on-year from 570,000 in 2022/23 to 893,000 in 2023/24, a substantial rise of 57%. The additional tax rate of 45% applies to earnings over £125,140.
These 893,000 additional-rate payers represented just 2.4% of all taxpayers in 2023/24 yet were responsible for 37.7% of tax collected.
Sarah Coles, head of personal finance at AJ Bell, said: “Almost eight million people relying on their pension for their main source of income are handing over £24 billion in tax every year – nearly half a million of whom are paying higher-rate tax.
“Meanwhile, higher earners are shouldering an incredibly hefty tax burden, with higher and additional-rate taxpayers handing over almost 70% of all tax between them.
“Frozen tax thresholds mean this is only going to get worse for everyone. In this environment, it’s vital to make plans to ensure you don’t pay more than your fair share of tax.”
