Sunak launches largest tax raid in 44 years, as 1 out of 5 Brits to pay higher-rate income tax by 2027

Rishi Sunak has launched the largest tax raid in 44 years, with one in every five taxpayers expected to be in the higher-rate income tax band by 2027.

The Prime Minister and his Chancellor, Jeremy Hunt, recently stated that income tax thresholds will be frozen, despite the fact that the levy typically rises in accordance with inflation.

According to the Institute for Fiscal Studies (IFS), the threshold freeze is the Treasury’s single largest revenue raiser since Geoffrey Howe boosted VAT from 8% to 15% after Margaret Thatcher came to power in 1979.

According to official estimates, the move will ensure that 7.8 million people will pay a tax rate of 40p or more on incomes by 2027-28.

As a result, the overall proportion of individuals paying the higher rate will have quadrupled since the early 1990s.

Teachers, nurses, and electricians have been identified as workers who are likely to suffer as a result of the shift.

The IFS also cautioned that the freeze will “disincentivize work” at a time when the government is attempting to encourage Brits to return to work following the implementation of Covid.

According to the think tank, “more adults than ever before are paying higher-rate tax.”

Isaac Delestre, research economist at the IFS, added: “For income tax, the story of the last 30 years has been one of higher-rate tax going from being something reserved for only the very richest, to something that a much larger proportion of adults can expect to encounter.”

He added: “Alongside the fact that 1.7m people will be paying marginal rates of 60 per cent and 45 per cent in the next few years, this represents a fundamental and profound change to the nature and structure of our income tax system.”

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The Prime Minister came under mounting pressure to introduce immediate tax cuts after the Conservative Party was dealt a mauling at the local elections earlier this month.