Over 100,000 people have been ‘dragged’ into the 60% tax trap!

Over 100,000 people have been ‘dragged’ into the 60% tax trap!

The number of people that have been pulled into 60% tax has increased by 18% to around 634,000 in the last 12 months, while over four million now pay higher rate tax.

The reported figure, which is up from 537,000 in 2023, shows the number of people being affected by the threshold freeze, particularly when you consider that just two years ago there were only 436,000 taxpayers paying an effective tax rate of 60% as a result of losing the £12,570 personal allowance once earnings hit £100,000.

The problem is only set to worsen as more people are drawn into this earnings bracket with frozen thresholds creating a massive fiscal drag, with the government advising that they have no plans to remove the freeze before 2028.

There are fears that this ‘tax trap’ has the ability to ‘disincentivize hard work’, and that people could avoid going for promotions or even taking pay rises if they know they would be hit by the 60% rate.