Within 20 years it is estimated by the UK’s official economic forecaster that a third of workers, including people like nurses and teachers, will be on the higher rate of tax. Back when the 40% tax band was introduced (25 years ago) just one in 20 workers had to pay it.
Today there are around 4.6 million people paying at the 40% rate and 300,000 workers earning over £150,000 and paying 45% tax.
Responding to a request from the Daily Telegraph, the Office for Budget Responsibility (OBR) predicted that by the year 2033 around 9.2 million people would be paying the 40% rate and 1.7 million at the 45% rate if the threshold rises in line with inflation.
“Because earnings are expected to rise more quickly than prices in the long term (due to productivity growth), this would result in the average tax rate rising steadily over time as more income moves into higher tax bands.”
The former Conservative Chancellor, Lord Lamont said that increasing the higher rate of tax should be a “top objective for a Conservative government” after the election.
He went on to say that it makes no sense that a rate that was initially intended for the richest people in the country is now being paid by those in middle management and secretaries.
Conservative MP John Redwood also commented, saying that more and more people are paying the 40% rate and that those paying it are not ‘high earners’ by any stretch of the imagination.