Twenty-five years ago, when the then Tory chancellor Lord Lawson of Blaby introduced the 40 per cent band, it caught only one person in 20. Today, it is just over one in six.
The OBR forecast the number who will pay the higher rates of income tax if the current £41,865 threshold rises in line with inflation. At present, 4.6 million people pay the 40p higher rate and 300,000 pay the 45p additional rate for those earning more than £150,000.
By 2033 the OBR forecasts 9.2 million people will pay the 40p rate and 1.7 million the 45p rate, roughly a third of the workforce.
Wages, over time, rise faster than inflation. Thus tax bands which rise only with inflation will bite harder and harder into wages ever lower down the earnings scale.
That’s how we end up with the completely twattish idea that someone working part time on the minimum wage pays income tax. And Chancellors absolutely love it, of course.