Hundreds of thousands of workers are being dragged into Britain's top tax bracket, forcing them to hand over 45per cent of every pound earned above the threshold.
Fresh figures from HM Revenue & Customs reveal the scale of the squeeze on earners, with 324,000 additional people now caught in the highest income tax band.
The data shows a staggering 56.8 per cent jump in the number of additional rate taxpayers between the 2022/23 and 2023/24 tax years.
By the end of that period, some 893,000 individuals were paying the top rate, with their combined tax bill reaching £103billion.
This surge represents a rise of nearly £20billion in tax liabilities for top earners, climbing 23.9 per cent compared to the previous year.
The dramatic increase stems from what experts describe as fiscal drag – a process where frozen tax thresholds fail to keep pace with rising wages, pushing workers into higher bands without any official rate changes.
Income tax in England, Wales and Northern Ireland operates across three bands: the 20 per cent basic rate, the 40 per cent higher rate, and the 45 per cent additional rate for earnings above £125,141.
The conservatives initiated the freeze on income tax thresholds, and it was originally set to end in 2026 before being pushed back to 2028.
Rachel Reeves, who took over as Chancellor following Labour's July 2024 election victory, has since extended these freezes until April 2031, meaning even more workers will find themselves pulled into higher tax bands as wages rise.
Even more workers will find themselves pulled into higher tax bands as wages rise
| GETTYThe impact extends well beyond the top bracket.
Higher rate taxpayers swelled by 654,000 to reach 5.76million, a 12.8 per cent increase that delivered £87.6billion to Treasury coffers.
Being pushed into a higher band carries additional consequences, including increased taxes on capital gains and savings interest, while personal savings allowances shrink or disappear entirely.
David Little, a partner at Evelyn Partners, said: "This data reveals how the powerful tide of fiscal drag is increasing the UK tax burden by sweeping millions into higher tax brackets, and into paying tax for the first time."
Higher rate taxpayers swelled by 654,000 to reach 5.76million
| PABasic rate taxpayers also grew by 1.15million during the period.
The outlook suggests the squeeze will only intensify. According to the Office for Budget Responsibility, a quarter of all taxpayers will be paying higher or additional rates by 2030, compared with just 15 per cent in 2021.
The tax burden is projected to climb to 38.5 per cent of GDP by the 2030/31 tax year.
Some well-paid workers are already declining pay rises to stay below key thresholds
| GETTYSome well-paid workers are already declining pay rises to stay below key thresholds, while others are maximising pension contributions to reduce their liability.
The OBR has cautioned that the growing tax burden "increases the risk that incentives within the tax system distort or constrain economic activity by more than expected."