Number of higher rate taxpayers set to double as stealth taxes bite

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The number of higher rate taxpayers is set to double to a new record high of 7.5 million due to the government’s stealth taxes, analysis by the Liberal Democrats has revealed.

Figures published by the Office of Budgetary Responsibility show that there will be an estimated 7.5 million higher rate taxpayers by 2028-29, almost double the 3.8 million there were in 2019-20 at the start of the Parliament. This rise is due to the Chancellor’s decision to freeze income tax thresholds which will drag millions of taxpayers into a higher rate.

The proportion of all income taxpayers in the higher rate is set to soar from 12% in 2019-20 to 19% by 2028-29. It means almost one in five income tax payers are set to be in the higher rate.

Meanwhile the number of people paying income tax is set to rise from 31.5 million in 2019-20 to 39.2 million by 2028-29, as people are dragged into paying tax through the freezing of the personal allowance. 

The number of additional rate taxpayers, those paying the top rate of income tax, is set to double from 600,000 in 2022-23 to 1.3 million in 2028-29.

Liberal Democrat Treasury Spokesperson Sarah Olney MP said:

“Millions of people have been bitterly betrayed by this Conservative Government which chose to hit them with a stealth tax in the middle of a cost-of-living crisis.

“Years of unfair tax rises will see record numbers of people paying the higher rate of income tax. It’s shocking that Rishi Sunak and Jeremy Hunt won’t even admit this and come clean with the British public."

ENDS

Notes to Editor:

First reported in The Times here. 

Liberal Democrat analysis can be found here.

The latest figures from the Office of Budgetary Responsibility, published on 7 December 2023, can be found here.

HMRC statistics on the number of basic and higher rate income tax payers in 2019-20 can be found here.