Data obtained through a freedom of information request to HM Revenue & Customs shows that an estimated 634,000 individuals fell into this bracket in 2023-24, a 45% surge compared to 436,000 just two years prior, Financial Times reports.

This tax trap arises from the interaction of a frozen personal allowance (£12,570 since 2021) and the tapering away of this allowance for those earning over £100,000. Essentially, for every £2 earned above this threshold, £1 of the allowance is lost, resulting in an effective 60% tax rate on earnings between £100,000 and £125,140.

Experts attribute this rise to fiscal drag – the combination of frozen tax thresholds and wage inflation. As wages increase, more individuals are pushed into this higher tax band.

This situation has raised concerns about disincentivising work and discouraging career progression. While some individuals may mitigate the impact through salary sacrifices or increased pension contributions, these options are not always desirable.

A Treasury spokesperson said: “We are committed to keeping taxes low for working people, which is why we protected payslips from tax rises and are not extending the freeze on personal tax thresholds past 2027-28.”