Research indicates a significant surge in the number of individuals paying income tax since 2010, with an additional four and a half million people surpassing the personal allowance threshold.
According to findings by the TaxPayers’ Alliance, an advocacy group promoting lower taxes, the UK now boasts 35.5 million income taxpayers, up from approximately 31 million in 2010. Under the current taxation structure, income tax becomes applicable when earnings exceed £12,570. Individuals earning between this threshold and £50,270 are subject to a basic rate of 20%.
Earnings surpassing this bracket trigger higher tax rates of 40% or 45%, depending on the income level. The alliance highlights a notable increase of about 1.7 million individuals now paying the basic rate of income tax, bringing the total to 28.5 million since 2010. Chancellor Rishi Sunak's decision to freeze income tax thresholds in the 2021 spring budget drew criticism, labelling it a "stealth tax." This freeze implies that as wages rise, more individuals are drawn into the tax net or face higher tax rates.
In the autumn statement of 2022, Chancellor Jeremy Hunt announced the continuation of the freeze on income tax thresholds until April 2028.