HMRC figures show two million more higher-rate taxpayers since 2021-22

The number of people paying the 40% higher rate of income tax in England, Wales and Northern Ireland rose from 4.43 million in 2021-22 to 6.31 million in 2024-25, according to HMRC figures reported on 25 July 2024¹. That is an increase of 42% over three years, against a rise of 220,000, or 5%, in the previous four years from 2017-18 to 2021-22¹.

The same data shows the total number of income tax payers rose by 13%, from 33 million in 2021-22 to an estimated 37.4 million in the current financial year¹. More than two million people have started paying basic-rate tax for the first time since 2021-22, and more than 500,000 have moved into the additional-rate bracket, where numbers have more than doubled¹.

The thresholds have been frozen since 2021-22, so wages rising while bands stay fixed pull more people into higher bands, an effect described as fiscal drag¹. For income tax in England, Wales and Northern Ireland, the bands are:

The personal allowance is £12,570¹. It is reduced by £1 for every £2 earned over £100,000, so by £125,140 all income is taxed¹. Scotland has different bands and rates¹.

Why it matters for households

A frozen threshold means a pay rise can move someone into the 40% band without any change in the tax rules, so the proportion of earnings taken in tax rises. The figures cover England, Wales and Northern Ireland only; Scottish taxpayers face separate bands¹. The £100,000 threshold also affects the personal allowance, so earners just above it lose part of the allowance as income rises¹.

For those affected, the report notes several tax-free or tax-relieved options. Up to £20,000 can be held in a cash or stocks and shares Isa, and up to £50,000 in premium bonds, which pay no interest but enter a monthly prize draw with prizes from £25 to £1m¹. Pension contributions attract 20% relief automatically for basic-rate taxpayers; higher and additional-rate taxpayers must claim the remainder, 20% or 25% respectively, through a self-assessment return¹. On dividends, the basic rate is 8.75%, the higher rate 33.75% and the additional rate 39.35%¹.

What happens next

No further HMRC release or government decision is reported in the material. The 2024-25 figures are described as covering the current financial year¹.