More than half a million UK taxpayers caught in 60% tax

More than half a million UK taxpayers caught in 60% tax

The number of taxpayers paying 60% tax on a proportion of their income was 537,000 in 2022-23, which is up 23% from 436,000 in 12 months.

The current income tax system means that people earning between £100,000 and £125,140 pay 60% income tax on that slice of their earnings. This is because the tax-free personal allowance of £12,570 is gradually removed once earnings exceed £100,000 annually.

The number of people caught in the high earner tax trap has jumped in the past year as inflation has continued to drive up wages.

Meantime, it is expected that up to 300,000 people could be dragged into higher rate tax in 2024 as years of frozen thresholds erode the tax free sum, bringing 40% tax earners to a record 4.4 million. At the same time, over one million people are now paying additional rate tax at 45%, with a further 180,000 taxpayers likely to exceed the £125,140 limit by the end of the year.