Income tax UK: Chart shows 3 million more paying basic rate in last five years
Key takeaways
- Nearly 30 million people now pay the basic rate of income tax, up more than three million since 2020.
- Frozen thresholds and rising wages are driving the increase.
- Higher-rate taxpayers have surged to 6.56 million, the highest on record.
- More than two million more people are paying the higher rate income tax than five years ago.
Frozen thresholds and rising wages have pushed more workers into the basic and higher tax bands.
New NimbleFins analysis of HMRC and ONS data shows the basic-rate taxpayer population has jumped by more than three million since 2020 - a trend economists warn will accelerate after the Government decided to freeze the income tax threshold until 2031 in the Autumn Budget.
The research highlights how fiscal drag has quietly become one of the biggest tax increases of the last decade.
Millions more paying income tax compared with 2015, 2020 and 2025
Income tax bands have been largely frozen since 2021, meaning the personal allowance (£12,570) and the basic-rate threshold (£50,270) have not kept pace with wage growth. As salaries rise, more people naturally move into tax-paying bands - even if their real purchasing power has not increased.
Number of basic rate and higher rate income tax payers
NimbleFins’ analysis of the past decade shows:
- 2015/16: 25.3 million basic-rate taxpayers
- 2020/21: 26.6 million basic-rate taxpayers
- 2024/25: 29.9 million basic-rate taxpayers
That is a rise of:
- +3.3 million since 2020
- +4.6 million since 2015
Higher-rate taxpayers have risen even faster:
- 2015/16: 4.51 million
- 2020/21: 3.98 million
- 2024/25: 6.56 million
This means over two million more people are paying 40% tax today compared with five years ago.
More pensioners are also being dragged into paying income tax. Because the State Pension has risen faster than wage growth, and the income tax threshold remains frozen, pensioners receiving the full State Pension (£11,973 a year in 2025) have just £597 of tax-free headroom before they start paying income tax. And in 2026, the State Pension will rise to £12,547.60 - above the income tax threshold for the first time.
Proportion of basic rate and higher rate taxpayers
We know that population has grown as well in that time. So we have a ratio of basic and higher rate taxpayers to the number of 16+ year olds. This metric essentially neutralises the impact of rising population on the first chart.
The proportion of the adult population paying the higher rate has climbed from 8.1% to 11.4%, and more than half of all adults now pay basic-rate tax.
The trend accelerates sharply from 2021 onwards – which was when thresholds were frozen.
This pattern illustrates why fiscal drag is often described as a ‘stealth tax’: most people do not notice the impact until they see their payslip or move into a new tax bracket.
Basic-rate taxpayers as % of adults:
- 2015/16: 47.4%
- 2020/21: 48.6%
- 2024/25: 51.9%
Higher-rate taxpayers as % of adults:
- 2015/16: 8.5%
- 2020/21: 7%
- 2024/25: 11.4%
The jump in the higher-rate category is particularly notable: despite wages only rising modestly, the frozen threshold means more middle-income workers are being treated as higher earners.
| Income Tax Payers | Number of basic rate Income Tax payers (thousands) | Number of higher rate Income Tax payers (thousands) | Age 16+ population | Proportion of basic rate Income Tax payers to 16+ population | Proportion of higher rate Income Tax payers to 16+ population |
|---|---|---|---|---|---|
| 2014/15 | 25,100 | 4,300 | 52,911,344 | 47.4% | 8.1% |
| 2015/16 | 25,300 | 4,510 | 53,328,777 | 47.4% | 8.5% |
| 2016/17 | 25,900 | 4,410 | 53,610,795 | 48.3% | 8.2% |
| 2017/18 | 26,000 | 4,210 | 53,884,028 | 48.3% | 7.8% |
| 2018/19 | 26,300 | 4,230 | 54,211,511 | 48.5% | 7.8% |
| 2019/20 | 26,500 | 3,830 | 54,374,351 | 48.7% | 7.0% |
| 2020/21 | 26,600 | 3,980 | 54,681,574 | 48.6% | 7.3% |
| 2021/22 | 27,400 | 4,430 | 55,224,918 | 49.6% | 8.0% |
| 2022/23 | 28,200 | 5,100 | 55,986,782 | 50.4% | 9.1% |
| 2023/24 | 29,200 | 6,030 | 56,685,313 | 51.5% | 10.6% |
| 2024/25 | 29,900 | 6,560 | 57,596,044 | 51.9% | 11.4% |
What the income tax bands should have been without the freeze
| Year | Inflation rate | Personal allowance | Higher rate threshold |
|---|---|---|---|
| 2021/22 | – | £12,570 | £50,270 |
| 2022/23 | 3.1% | £12,960 | £51,828 |
| 2023/24 | 9.1% | £14,139 | £56,545 |
| 2024/25 | 7.3% | £15,171 | £60,673 |
| 2025/26 | 2.5% | £15,550 | £62,189 |
| 2026/27 | 3.2% | £16,048 | £64,179 |
| 2027/28 | 2.1% | £16,385 | £65,527 |
| 2028/29 | 2% | £16,714 | £66,838 |
| 2029/30 | 2% | £17,048 | £68,174 |
| 2030/31 | 2% | £17,388 | £69,538 |
We do not know the inflation rate for 2028 onwards so have used the Bank of England target of 2% to give a guide.
Why are so many more people paying income tax?
Three forces are driving the surge:
1. Threshold freezes (fiscal drag) - The personal allowance and basic-rate thresholds have been frozen since 2021. Inflation and wage rises automatically push people into tax-paying bands.
2. Strong post-pandemic wage growth - As covered in NimbleFins’ average UK salary analysis, wages have risen quickly in sectors like construction, logistics and hospitality, nudging millions above tax thresholds.
3. Inflation - Even when real wages fall, nominal pay increases still cause more people to move into higher tax brackets.
Average salary vs tax thresholds
NimbleFins’ Average UK Salary research, found the average full-time salary is about £34,000, now only £16,000 below the higher-rate threshold.
In 2015, the average salary was £27,600, far below the higher-rate bracket. This shrinking gap explains why 40%-rate taxpayers have hit record numbers.
Summary
- NimbleFins’ analysis shows a sharp rise in basic and higher-rate taxpayers over the last decade, accelerated by threshold freezes.
- Nearly 52% of Britons pay basic rate income tax and more than 11% pay the higher rate.
- Millions of middle-income workers now fall into tax bands that previously applied to higher earners.
- The trend reflects fiscal drag rather than rising living standards.
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