Analysis from RIFT shows that since the 2021/22 tax year, a significant rise in UK taxpayers has occurred within the higher tax band, driven by wage inflation. The higher rate tax threshold of £50,271 has remained unchanged, leading to a 42% increase in higher rate taxpayers, totaling 6.31 million. With average high earner salaries rising from £50,201 to £61,041, more income is being taxed at higher rates despite the unchanged threshold. The consequences of fiscal drag highlight a strain on household incomes and shifts in taxpayer demographics.
Vast amounts of UK taxpayers are paying more income tax due to successive governments failing to increase tax in line with inflation.
The threshold has been frozen since April 2021, which has led to a 42% increase in higher rate taxpayers, from 4.43 million to 6.31 million.
Driven by wage growth, the average high earner's salary has climbed by 22% to £61,041, increasing the amount subject to the higher rate of tax.
79% of those utilizing RIFT for tax refunds earned within the basic rate, while 18% fell under the higher rate, revealing a significant shift.
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