Industry reacts to 'agonising pain' of fiscal drag

An estimated 37.4 million income taxpayers for the 2024/25 tax year

Sahar Nazir
clock • 2 min read

There has been a sharp increase in the number of people paying income tax, according to latest figures from HM Revenue & Customs (HMRC), underscoring the impact of frozen tax thresholds and fiscal drag on the UK population.

The data shows an estimated 37.4 million income taxpayers for the 2024/25 tax year, a 13% rise from 2021/22, translating to 4.4 million more people paying tax. Pensioners have been particularly affected, with 8.5 million taxpayers over state pension age—a 26% increase since 2021/22. Hargreaves Lansdown head of retirement analysis Helen Morrissey highlighted the dual nature of the rise: "Frozen tax thresholds are biting down hard on pensioner incomes. This is due in part to pensioners having larger incomes in retirement, which is positive. "However, the deep freeze on tax thresholds...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Your profession

Why human connection remains central in a digitally enabled advice sector

Why human connection remains central in a digitally enabled advice sector

'It is clear that the sector is moving through a significant period of transformation'

Tim Riseborough
clock 17 December 2025 • 3 min read
Why advisers shouldn't rush into private markets

Why advisers shouldn't rush into private markets

'There's only so long the hamster wheel can keep turning'

Justin Cash
clock 15 December 2025 • 4 min read
Adviser workload set to rocket ahead of IHT on pensions changes

Adviser workload set to rocket ahead of IHT on pensions changes

Large volumes of clients will need reviews of financial plans

Isabel Baxter
clock 15 December 2025 • 3 min read