The number of UK taxpayers paying the highest income tax rate has surged to 1.14 million in the 2024-25 tax year, a 24% increase from the previous year. The number of “additional rate” taxpayers is expected to reach 1.23 million, with a 163% increase over the past five years.

Neela Chauhan of UHY Hacker Young attributes this rise to “fiscal drag,” where inflation pushes taxpayers into higher brackets, creating a stealth tax. Individuals earning over £125,140 face a 45% tax rate, leading to concerns over the impact of higher tax burdens on high earners.

Senior tax partner Donald Parbrook urges Chancellor Rachel Reeves to revisit proposals to simplify the UK’s tax system without harming business confidence. The Autumn 2025 Budget could provide a platform for significant tax reforms in response to economic changes and the search for new revenue sources.

Amid trade uncertainties and fiscal tightening, the Chancellor is expected to propose reforms affecting inheritance tax, pension rules, and National Insurance. The aim is to address public finance pressures and seek new revenue streams to support the economy.

Read more at Yahoo Finance: UK highest income tax rate payers surpass one million