The number of higher rate taxpayers in the UK is projected to surpass 7m this year, with a freeze on thresholds meaning an additional 500,000 individuals will be subjected to a 40% tax rate by 2025-26. Laura Suter, head of personal finance at AJ Bell, cautioned that "everyone is caught by frozen tax thresholds," impacting not only workers but also pensioners. The current tax structure means that once individuals exceed the £50,270 threshold, they face a significantly higher tax rate on additional earnings. A Government spokesperson noted that the freeze on tax thresholds was inherited from the previous administration, but assured that there would be no increase in basic, higher, or additional rates of income tax.
