Frozen tax thresholds have pushed millions more into higher and additional-rate income tax
Close to two million people across the UK have been dragged into the higher-rate income tax band since the beginning of this decade, according to new data. A total of 5.76 million individuals were paying the higher rate during the 2023/24 tax year, as revealed by HM Revenue and Customs.
This marks a 50% rise from 3.83 million in 2019/20. A further 654,000 people were added to the higher-rate band between 2022/23 and 2023/24, representing a year-on-year increase of 13%. HMRC confirmed the surge 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 individuals begin paying the higher rate of income tax at 40% has remained frozen at £50,271 since 2021/22. Tax thresholds would traditionally rise in line with inflation, but the freeze – brought in by the former Conservative government – has resulted in greater numbers of people being pushed into the higher bracket as their wages have increased.
Chancellor of the Exchequer Rachel Reeves confirmed at the Budget in November 2025 that the freeze will remain in place until 2030/31, meaning even more people are set to fall victim to so-called “fiscal drag” and find themselves liable for the higher rate. HMRC’s data reveals that higher-rate taxpayers accounted for 15.7% of all UK taxpayers in 2023/24, nearly one in six, up from 12.2% in 2019/20, or roughly one in eight.
Higher-rate taxpayers contributed 32.0% of the total income tax collected by the Government in the year ending March 2024. The number of basic rate taxpayers stood at 29.40 million in 2023/24, up nearly three million from 26.50 million in 2019/20.
Basic rate taxpayers surged 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”.
A freeze on the personal allowance threshold – meaning income up to £12,750 remains untaxed – has been in effect since 2021/22 and is set to continue until 2030/31. Basic-rate taxpayers represented 29.9% of total government revenue in 2023/24, marginally below the 32.0% figure for higher-rate taxpayers.
Those paying the additional rate of income tax rose dramatically year-on-year from 570,000 in 2022/23 to 893,000 in 2023/24, representing a 57% increase. The additional tax rate of 45% applies to earnings exceeding £125,140.
These 893,000 additional-rate taxpayers comprised just 2.4% of all taxpayers in 2023/24 yet accounted for 37.7% of tax revenue.
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.”
