Wage inflation pushes thousands over the higher threshold Data from HMRC reveals the total number of workers paying the 40p rate of income tax has risen to 4m with fiscal drag carrying about 100,000 workers into higher-rate tax bands in 2019-2020 and 2020-2021. The impact of fiscal drag is expected to get much worse as inflation soars and wages rise, with tax bands frozen until 2028, something The Centre for Economics and Business Research previously said will lead to the number of workers paying 40% tax to double to 8m. The latest official data from HMRC shows that the number of additional-rate taxpayers – those who pay the highest 45% income tax rate – rose by 12,000 between 2019 and 2021 to 433,000. The amount of tax collected from this cohort rose by £2.8bn to almost £64bn.