England’s Higher Rate taxpayers surge 85% in five years

Number of Higher and Additional Rate taxpayers in England surges by over 85% in last five years, finds financial expert.

• Data reveals around 8.3 million Brits now fall into the higher or additional rate tax bracket, yet “few feel genuinely better off”, according to Price Bailey
• This follows the Government’s budget, which announced an extension to the tax threshold freeze until at least 2030

The number of individuals in England paying higher or additional rate income tax has risen by an average of 88% over the past five years, according to new analysis of data obtained by the Office of National statistics, conducted by Price Bailey, the leading accountancy firm.

The sharpest average annual increase occurred between the 2022/23 and 2023/24 tax years, with a 23% rise, this was up from 15% the previous year and just 12% between the 2020/21 and 2021/22 tax year. The data highlights the growing impact of fiscal drag, as frozen tax thresholds push more earners into higher rate tax brackets.

The data goes on to show that all English regions have experienced increases but those in the Higher Rate tax bracket living in the North West and Yorkshire have experienced an increase of over 100% since 2020/21. Followed by the West Midlands (98%), East Midlands, North East (94%) and the South West (90%). Higher Rate taxpayers in London saw the lowest rate of increase, at 57% since 2020/21.

Richard Grimster, Head of Tax and Partner at Price Bailey, comments:

“When compared to the inflationary effects and modest wage increases seen during the same time period, these figures demonstrate a substantial level of fiscal drag across England, now made only more prevalent following the Government’s decision to extend the threshold freeze until 2030. As wages and prices rise over time, individuals may find themselves paying a higher percentage of their income in taxes, even if their purchasing power hasn’t improved. This phenomenon subtly increases tax burdens while boosting government revenue without explicit tax rate hikes.”
Grimster continues: “We also know that while inflation and modest wage increases have persisted, GDP has not grown at anything like the rate of higher or additional rate taxpayer numbers. The result is that around 8.3 million people now fall into these tax brackets, yet few will feel genuinely better off.”

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