Cost of living squeeze could ‘be worse than the financial crisis’ Analysis by the House of Commons Library reveals that an extra 1.2m people are set to be dragged into the higher rate tax band over the next four years compared to if the Government were to raise the 40p higher rate tax threshold in line with forecast inflation. If it did so, the higher rate band would rise from £50,070 to £56,270 by 2026. Additionally, an extra 1.5m low paid earners will be pushed into the 20p basic tax rate, which starts at £12,570. The research comes amidst warnings that Britain is facing the biggest cost of living crisis for a generation, with both Conservative and opposition MPs calling for plans to keep the thresholds frozen to be revisited. Meanwhile, the Chancellor, Rishi Sunak, is coming under increasing pressure to drop a 1.25% hike in National Insurance which comes in from April – the same time people are facing an increase of as much as 56% in their energy bills. Combined with inflation, which is currently running at 5.1%, economists such as Paul Johnson, the director of the Institute for Fiscal Studies, say people face a squeeze this year that "could well be worse than the financial crisis". However, Mr Sunak insisted the increase was “the responsible thing to do” amidst “unprecedented backlogs in the NHS.” There are many economic studies that show that high levels of taxation are counter productive and result in lower overall tax receipts.