The number of higher rate taxpayers in the UK will rocket 65% in the next four years from 4.1million to 6.8million, according to the Office for Budget Responsibility.
The threshold for 40% tax has been frozen at £50,270 until April 2026. Without that freeze, it was expected the number of higher rate taxpayers would have risen steadily from 4.1m in 2021/22 to 4.8m by 2025/26.
Previous OBR estimates suggested that freezing the threshold until 2026 would create an extra one million higher rate taxpayers on top of that.
As a result of rising inflation, the OBR now estimates an additional two million people will be dragged into the higher rate of tax by the freeze.
Number of extra higher rate taxpayers in UK created by freezing threshold
New forecast (2022)
Old forecast (2021)
2022/23
441,000
186,000
2023/24
1.33m
443,000
2024/25
1.77m
739,000
2025/26
2.02m
1.00m
With so many new higher rate taxpayers in the UK, thousands of people will be unaware of the traps to watch out for.
