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...

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