High-rate taxpayers increase by 20 per cent

The number of higher-rate taxpayers in Britain has increased by more than 20 per cent over the past five years, due to the Government's failure to raise the income tax thresholds in line with wage inflation.

According to new statistics by the accountants UHY Hacker Young, more than 3.7 million UK citizens have a marginal tax rate of 40 per cent, up from 3 million in 2002/03. In the current tax year, the 40 per cent rate applies to earnings above £39,825 a year.

Although the Government has increased income tax thresholds in line with inflation every year since 1977, wages have increased much quicker in recent years. UHY says that average wages have risen by 20.8 per cent over the past five years, while the higher-rate income tax threshold has increased by just 15.7 per cent.

"This is a stealth tax that has received very little attention," said Roy Maugham, a partner at UHY. "The vast majority of people who have moved into the higher tax bracket have quite modest lifestyles and purchasing power.

"Just like inheritance tax, the Government has been quite content to see those on relatively modest incomes get caught by a tax that was meant to target the rich."

A Treasury spokesman said the growing number of people paying higher-rate tax was merely a sign of Britain's economic success. "The basis of a fair, progressive income tax system is that as individuals' real income rises, the average tax they pay goes up," the spokesman said. "The increase in the number of higher-rate taxpayers is a sign of economic success and increased national prosperity. Since 1997, there are 2.6 million more people in employment and over twice the number of people earn over 30-, 50- and 100-thousand pounds. At the same time, thanks to tax and benefit reforms introduced by this Government over the last 10 years, this year households will be £1,000 better off in real terms on average."

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Ashdown Group: Training Coordinator - Financial Services

    £32000 - £38000 per annum + benefits: Ashdown Group: A highly successful, inte...

    Recruitment Genius: Business Development Executive - Affiliates & Partnerships

    £20000 - £35000 per annum: Recruitment Genius: This multi-award winning foreig...

    Recruitment Genius: Retirement Coordinator - Financial Services

    Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

    Day In a Page

    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe
    Number plates scheme could provide a licence to offend in the land of the free

    Licence to offend in the land of the free

    Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
    From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

    From farm to fork in Cornwall

    One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
    Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

    Robert Parker interview

    The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
    Don't believe the stereotype - or should you?

    Don't believe the stereotype - or should you?

    We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor