Higher rate tax bands for more than 1.5 million by 2027

More than one million people could be in a higher tax band by 2027, figures from HMRC suggest. 

As a result of what is being dubbed Jeremy Hunt’s ‘stealth tax raid’, 1,130,000 workers could be dragged above the 40% tax threshold by 2027/28. 

Meanwhile, over 300,000 UK citizens will become additional rate taxpayers at 40%. 

Currently, those on a salary between £50,271 and £150,000 fall into the higher tax band, meaning they have to pay 40% tax. 

During last year’s Autumn Statement, it was announced that the threshold will be frozen until 2027/28.

From April 6, 2023 the Income Tax additional rate threshold will also be reduced from £150,000 to £125,140. 

The increase in Britons paying higher tax is a result of fiscal drag. This is when income tax thresholds do not change despite inflation, often leaving people with more tax to pay, and less money to take home. 

Rachael Griffin, tax and financial planning expert at Quilter, says: “Over a million more people will be subject to higher rate tax due to wage inflation and many of those may not feel wealthier as their salaries have simply kept up with inflation. This means that in real terms their buying power remains much the same, yet their salaries are taxed much more. 

“Freezing income tax bands is a form of stealth tax as you’ll end up paying considerably more tax during the time bands are frozen, which will be on top of higher energy and food costs.”

Here at Mint Umbrella, we take care of our candidates finances and will inform you of any changes to tax regulation, so watch this space. 

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