It has been estimated that around 2.6 million people will be caught out with the freeze in income tax thresholds from April 2023 until 2028.

The current rate of 20% applies on any income over £12,570 a year and rises to 40% on income over £50,270. However as wages increase, and income increases through price increases, more people will move into the higher tax brackets.

The IFS said by 2027-28, the number of people paying the higher rate of income tax will reach 7.8 million, or a fifth of taxpayers.

This will include more than one in eight nurses, and one in four teachers.

In contrast to the 1990s, there were no nurses and only one in eight teachers who paid the higher rate of tax.

The IFS said it is a “seismic shift”, and the single biggest tax raising measure since Geoffrey Howe doubled VAT in 1979, in the first year of Margaret Thatcher’s government.

Source: BBC News