'quiet' tax raid sees millions more clobbered by rachel reeves

THE NUMBER OF INCOME TAX PAYERS HAS SURGED TO 37.7 MILLION IN THE 2024/25 TAX YEAR - UP 6.2 MILLION COMPARED TO JUST FIVE YEARS AGO, AS THE TAX BURDEN INTENSIFIES ON HOUSEHOLDS RORY POULTER

15:59, 02 Jun 2025 Millions more Brits are being dragged into paying more tax as frozen personal allowances deliver a bonus to Rachel Reeves and the Treasury, new data shows. Some 37.7

million Brits are paying income tax in the 2024/25 tax year - a 6.2 million jump from just half a decade back. Numbers have shot up by 1.4 million from last year alone, piling more pressure

on people already dealing with living cost nightmares. To add to the issue, the people paying for Class 1 National Insurance – the money taken from pay – has risen too, from 26.6 million in

2022/23 to 28.5 million this tax year. The decision by the former Tory government to freeze income tax thresholds, including the £12,570 personal allowance, means it has not budged since

2021/22 despite soaring inflation. The resulting so-called fiscal drag means wages and pensions rise with inflation, but the point at which people start paying tax remains the same –

dragging more people into the system and forcing others into higher tax bands., reports the Express. Clare Stinton, head of workplace saving analysis at Hargreaves Lansdown, warned:

"Frozen income tax thresholds are quietly reshaping the tax landscape, with millions more people now paying tax." She said: "New figures reveal that there were six million

more income taxpayers than there were five years ago, with 37.7 million of us paying tax in 2024/25. This is fiscal drag in action - a stealth tax that quietly increases the tax burden

across the board." Article continues below She further commented: "Since 2021/22, the personal allowance has been stuck at £12,570. If it had kept pace with inflation, it would be

around £15,518 today. Instead, millions on modest incomes have been dragged into paying tax for the first time. READ MORE: Pubs face wipeout as Rachel Reeves told to make urgent change

"The cost-of-living crisis hasn't gone away, and now lower earners must factor tax into their long list of essentials. With the freeze set to remain until 2028, the impact is only

set to deepen." The elderly are among those most exposed to this tax snatch. The State Pension has shot up by 24% in three years, thanks to the triple lock - from £185.15 in 2022/23 to

£230.35 per week in 2025/26 - but many pensioners now risk being taxed on this income alone. Ms Stinton warned: "Pensioners are particularly at risk... if the State Pension continues to

rise at a similar pace, more retirees could soon find themselves crossing the personal allowance threshold and paying tax on their State Pension alone." READ MORE: Major UK bank

offering £180 to new customers - but there's a catch The effect isn't just hitting the poorest. Those with savings and investments are also getting caught out, as inflation-linked

pay rises push them into higher brackets. This means more income is taxed, more savings are taxed, and more people pay more, without any official tax hikes. "That's why it's

more important than ever to be proactive with your tax planning," advised Ms Stinton. "Paying into your pension can help keep total taxable income below income tax thresholds,

while at the same time boosting your retirement savings. A double win. READ MORE: People born before specific year will get two extra DWP benefits worth £1,362 a month "And for those

saving for retirement, it's worth thinking long-term. If you're aiming for a retirement income that may exceed future tax thresholds, consider using ISAs alongside a pension.

Income taken from an ISA is tax free so can be used alongside a pension to give you much needed flexibility in managing your tax bill." The figures, released by HMRC, have sparked new

allegations that the government is sneakily using stealth taxes to prop up the nation's economy instead of openly hiking tax rates. Critics are up in arms, claiming this tactic unfairly

targets workers and savers, especially since the freeze is set to last until 2028. Article continues below James Murray, Exchequer Secretary to the Treasury, addressed MPs in May during a

debate, acknowledging the hefty cost of raising the threshold to £20,000 – a move called for by a widely-supported petition. He stated: "I recognise the views of everyone who has put

their name to the petition, and let me be clear that, as a Government, we want taxes on working people and on pensioners, who have worked hard all their lives, to be as low as possible. READ

MORE: Martin Lewis' MSE issues new alert as thousands of households due up to £1,000 "We were elected to put more money in people's pockets and, crucially, we were elected to

do so in a fiscally responsible way. That is a critical point to understand. We want to keep taxes on working people and pensioners as low as possible, but if we were to follow the calls of

some Opposition parties and abandon fiscal responsibility, it would lead to economic chaos and the collapse of public services, and that would harm working people and pensioners the

most."