A higher 40% tax rate could be imposed on one in five Britons.

A covert raid by Prime Minister Rishi Sunak could result in one in five UK taxpayers paying higher rates of tax by 2027, based on the latest study.

According to the Institute for Fiscal Studies' analysis, if income tax levels stay unchanged, 2.5 million additional people will be paying rates of 40% or higher.

These results will put Sunak under more pressure from Conservatives who believe they will lose the next general election unless the government raises taxes.

Despite facing the greatest cost-of-living crisis in decades, many employees are being pushed into higher tax bands as earnings increase due to the proposed six-year threshold freeze. According to the IFS, the so-called fiscal drag is projected to account for one-third of this year's anticipated record decline in family earnings.

In order to aid in the recovery of the public finances after the pandemic, the policy was established last year. The Office for Budget Responsibility predicted in March that by ensuring thresholds are untouched rather than adjusting them to account for inflation, the Treasury would gain an additional £29 billion by the 2027–28 fiscal year.

According to the IFS, the action is on track to be the single largest tax-raising initiative since Margaret Thatcher's administration raised the VAT rate in 1979.

By the fiscal year 2027–2028, the IFS predicts 7.8 million individuals will face income tax rates exceeding 40%. Since the early 1990s, the number of adults paying higher rates has increased by a factor of four.

Britain is currently seeing its greatest industrial unrest since the late 1980s as a result of the compression in living standards, with workers like teachers and nurses going on strike to seek higher pay. The impact of the threshold freeze is expected to be felt by both professions.

According to the IFS, by 2027, one in four teachers will be paying the higher tax rate, up from one in 16 in the 1990s. One in eight nurses will be subject to increased fees as well.

(bloomberg.com, obr.uk)