Rise in Higher Rate Taxpayers by 2015

Research by Grant Thornton suggests that an additional 1.4m people could be paying the higher rate of income tax for the first time within four years.

The firm’s calculations show that if wages increase at the rate predicted by government economists there will be a record 5.5m higher rate taxpayers by 2015. Even if wages grow at 2.5%, a lower figure than current government forecasts, more than 700,000 people will become higher or additional rate taxpayers in the same period.

Mike Warburton, senior tax adviser at GT, told the Daily Telegraph that he used figures on wage growth from the government's Office of Budgetary Responsibility for the analysis, but said that the lower 2.5% figure might be ‘more appropriate’.

Warburton said that the three-year freeze on tax thresholds announced by the Chancellor last June, coupled with wage growth, would create twice as many higher rate taxpayers by 2015 as there were in 1997.

A Treasury spokesman said the calculations were based on historic figures and that ‘the Government has a commitment to making real terms increases in the personal allowance each year.’