Record five million forced into higher rate tax band as fears Reeves will impose mini-Budget freeze loom
13 March 2025, 07:34 | Updated: 13 March 2025, 08:38
A record five million UK tax payers now fall into the highest rate tax bracket figures have revealed - as fears grow over the potential of Reeves' April mini-budget.
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Official figures released by HM Revenue and Customs (HMRC) show an extra 680,000 people were pulled into the 40 per cent tax bracket compared to the same period the previous year.
It's the first time the 5 million threshold has been breached - and comes amid fears that a mini-budget could see tax bands frozen, with middle-class taxpayers and families being hit hardest by the measure.
The move looks set to come despite the Chancellor promising no further tax hikes.
In October, Reeves had promised to end the tax bracket freeze - news that came as a welcome relief to millions of working families that found their incomes slipping over the threshold as a result of inflation.
Currently, the 40 per cent income tax rate applies to individuals earning over £50,271.
The new figures published by HMRC showed that 5.1million people are now paying the higher rate rate - up 15 per cent on 2021-2022.
Read more: Starmer set to slash red tape as PM plans to harness AI in Whitehall in 'era of instability'
Tax bands usually move in line with inflation, with a freeze likely to cause uproar given the sustained levels of inflation felt by the UK in recent years.
The move could see millions more families tipped over the threshold in the coming years, as the total number of higher-rate taxpayers looks set to hit nine million by 2028 - and ten million by the end of the decade.
It comes as Economist Julian Jessop told the Mail Online: "The jump in the number of higher-rate taxpayers is just the tip of the iceberg.
"‘The continued freeze on personal tax allowances could drag another four million people into the net by 2028.
"Moreover, there is already speculation that Rachel Reeves will extend the freeze for another two years in an emergency budget later this month."
Branded a quick way to disincentivise hard work by those who oppose such a move, the new HMRC figures span the period of 2022-2023.
Income tax bands were frozen back in 2021 by then-Chancellor Rishi Sunak following lockdown and the financial burdens felt by the Covid-19 pandemic.
The policy was outlined to run until 2026, with incoming Chancellor Jeremy Hunt extending that timescale until 2028.
It comes as Sir Keir Starmer looks set to slash the cost of regulation for businesses by 25%, as the PM looks to refocus the state on his key missions and create "an active government that takes care of the big questions, so people can get on with their lives".
The pledge could also see Starmer vow to harness AI in the upper echelons of Whitehall.
It's a move the PM hails a digital revolution, accusing it of creating a “cottage industry of checkers and blockers” who are holding back Britain.
