Boris Johnson has heaped higher tax rates on nearly 2m more Brits since he won the 2019 general election, reveal official figures published today.
The number of people paying the higher rate of income tax has swelled to 6.14m, up around 1.88m since Johnson led the Conservatives to a huge majority two and a half years ago, according to analysis of HMRC data released today by consultancy Lane Clark & Peacock (LCP).
The research illustrates that overbearing tax bills are feeding into a wider cost of living crisis that is pinching household budgets.
The Conservative government is forecast to preside over a parliament which expands the UK tax burden to levels not seen since the late 1940s when Clement Attlee’s post-war Labour government was in charge.
Sir Steve Webb, partner at LCP and a former Liberal Democrat pensions minister under the coalition government, said: “Paying higher rate tax used to be reserved for the very wealthiest, but this has changed very dramatically in recent years.”
Chancellor Rishi Sunak’s decision to freeze income tax thresholds until 2026 has meant millions of people have been caught by higher tax rates – a process known as fiscal drag, that is sometimes called a “stealth tax”.
The UK is suffering from the worst bout of inflation in four decades, prompting more people to pay higher income tax rates as a result of thresholds not moving in line with the rate of price rises.
When inflation is high, workers are more likely to receive a pay bump, meaning they can be subjected to a higher income tax rate.
“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,” Webb said.
“People who would not think of themselves as being particularly rich can now easily face an income tax rate of 40 per cent and around 1 in 5 of all taxpayers will soon be in the higher rate bracket.”
The higher tax rate is paid at 40 per cent on income from £50,271.
Analysts warned the government risks heaping more misery on already bruised household balance sheets by keeping tax thresholds frozen.
“Even by HMRC’s standards, the past year has been a bumper one for creating new higher rate taxpayers,” Clive Gawthorpe, tax partner at accountancy firm UHY Hacker Young, said.
“For years, HMRC has allowed ever more taxpayers to be dragged into the higher rate as a stealth tax increase,” he added.
“With inflation at the highest level in 30 years, the Government urgently needs to examine these tax brackets.”
The Treasury has been contacted for a response.