The number of people paying higher or additional rate income tax in England has risen by 88 per cent over the past five years, analysis of Office for National Statistics data by Price Bailey has shown.

The greatest annual increase took place between the 2022/23 and 2023/24 tax years, rising by 23 per cent.

By comparison, the number of higher and additional rate income taxpayers increased by 15 per cent between 2021/22 and 2022/23 and 12 per cent between 2020/21 and 2021/22.

Price Bailey said that the data highlighted the growing impact of fiscal drag, with frozen tax thresholds driving more earners into higher rate tax brackets.

Approximately 8.3 million people in England now fall into the higher or additional rate tax brackets.

All regions in England saw increases in the number of higher rate taxpayers, with the North West and Yorkshire experiencing an increase of over 100 per cent since 2020/21.

This was followed by the West Midlands (98 per cent), East Midlands and North East (94 per cent), and the South Weast (90 per cent).

Higher rate taxpayers in London saw the lowest rate of increase at 57 per cent since 2020/21.

“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,” said Price Bailey head of tax and partner, Richard Grimster.

“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.

“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.”

---