In 2020/21, another 100,000 people were hit with higher taxes

Thousands more people paid higher rates of tax between the 2019/20 and 2020/21 tax years, according to HM Revenue & Customs (HMRC).

The number of higher-rate taxpayers rose by 100,000 to 4.0 million between the two tax years, and £2.5 billion in tax, to £64.9 billion.

And the number of additional tax payers increased by 12 thousand during this period and reached 433 thousand.

The income tax liability of additional rate taxpayers rose by £2.8bn to £63.7bn, mainly due to a rise in employment income, HMRC said.

It also said the rise was partly due to the cap on the additional rate remaining unchanged at £150,000.

The figures, released on International Women’s Day (March 8), also showed that in 2020/21 there were more male taxpayers than female taxpayers in every age group and that men had higher median incomes.

For men, the number of taxpayers reaches the highest level in the age group of 30-34 years, i.e. 1.8 million.

Among women, the number of taxpayers aged 50 to 54 reached 1.4 million.

Wage growth may still accelerate, with inflation often forcing employers to pay their workers more to cope with rising costs.

Rachel Griffin, Quilter

Average median earnings across all age groups were £28,700 for men and £23,600 for women.

The highest median earnings were for men aged 45 to 49 (£35,600) and for women aged 40 to 44 (£27,800).

Rachel Griffin, tax and financial planning expert at Quilter, said of the increase in people paying higher rates: “It’s not surprising given that the rate at which someone starts paying higher tax has changed the least since 2019, regardless of salary. the increase during that time was significant due to a number of factors, including the pandemic.

“While wage growth may still accelerate, inflation often forces employers to pay their workers more to keep up with rising costs.”

He continued: “The reason more people are moving into the new tax brackets is because of fiscal barriers.

“Fiscal congestion occurs when the level of income at which taxes begin to accrue and the amount of income that can be earned tax-free does not increase at the same rate as inflation or income growth.

“This could result in a larger portion of a person’s income being taxed and also result in more people being placed in higher tax brackets, which ultimately means they pay more in tax.

“Quilter’s previous calculations showed that if pay rises averaged 5% a year over the next four years, but the income tax threshold remained frozen, a person earning £50,000 today would be £2,643 worse off in the 27/28 tax year. will be £6,463 poorer over four years.’

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