Teachers and nurses among millions facing tax hike with one in five to pay 40 per cent rate
16 May 2023, 06:00 | Updated: 16 May 2023, 06:40
Teachers, nurses and electricians will be among millions paying higher-rate income tax by 2027, according to research by the Institute for Fiscal Studies (IFS).
In recent years, higher rates of income tax have been paid by a more substantial proportion of the population - including some police officers and teachers - rather than the richest.
By 2027, some 7.8 million people are projected to be paying income tax at 40 per cent or above, equating to around one in five tax payers in what has been described as a "seismic shift" by the IFS.
In 1991, 1.6 million UK adults paid the 40 per cent higher rate of income tax. By 2022, 6.1 million were paying higher rates, the report added.
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The report predicted: "By 2027-28, more than one in eight nurses, one in six machinists and fitters, one in five electricians and one in four teachers are set to be higher-rate taxpayers.
"Among police officers, architects and surveyors, and legal professionals, we also see significant increases in the share paying higher-rate tax over time, with almost half of the latter two groups expected to be paying higher-rate tax in 2027-28."
The standard personal allowance is £12,570, which is the amount of income someone does not have to pay tax on.
For the 40 per cent rate to impact the same fraction of people as it did in 1991, the higher rate threshold would need to be nearly £100,000 in 2027-28 - nearly double the level set by the UK Government at £50,271, the report said.
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A number of Tory MPs have criticised the plans, with the current tax burden already at its highest since the Second World War.
Former Cabinet minister Simon Clarke said: 'We think we are suffering with our income tax burden now, but this analysis shows the worst is yet to come.
"We need to cut spending and taxes to ease the pressure on family finances, and we need to have a moment of levelling with the public that our current economic trajectory is simply unsustainable.
"That effort needs to begin before the next election, and we need to set out a clear plan to bring income tax rates down and unfreeze the thresholds at which people pay the different rates to reflect the stealth effects of inflation."
Meanwhile, former Brexit negotiator Lord Frost, who may run as an MP, has warned against becoming distracted from "'tax, spend, and regulation".
A Treasury spokesperson said: "After borrowing hundreds of billions to support the economy during the pandemic and Putin's energy shock, we had to take some difficult decisions to repair the public finances and get debt falling.
"It is vital we stick to this plan to halve inflation this year and get our economy growing again.
"To support working families, we have doubled the tax-free personal allowance, taking three million of the lowest earners out of paying income tax altogether."
