The UK's tax burden is set to reach "historic highs," with the Office for Budget Responsibility (OBR) predicting that the rate could hit 37.7% by mid-2027 compared to 32.9% before the pandemic. High earners, particularly in sectors like consulting and tech, have expressed frustration over steep marginal rates and many are opting to reduce their working hours to avoid crossing thresholds that trigger higher taxes. David Miles from the OBR has warned that it is "very difficult to increase the tax take without having some negative effects on incentives somewhere in the system." Jagjit Chadha from the University of Cambridge also warned that there could be an impact on work incentives, adding: "The extent to which taxes are also borne by employers will affect hiring." Thomas Pugh, the chief UK economist at RSM, said this is the case in the public sector, noting that "there's some pretty clear evidence that those punitive marginal tax rates are stopping consultants taking on extra hours."
