Threshold freeze ‘the ultimate stealth tax’ The Government's decision to freeze personal tax thresholds for the next five years will drag millions of middle-income earners into the 40% tax bracket. In the early 1990s, just 3.5% of UK adults paid income tax at the higher rate but the proportion is set to soar to 14% over the next five years, according to the Institute of Fiscal Studies (IFS). This amounts to 7.8m adults – or 20% of the 38m people projected to be paying income tax in 2028. The IFS says the threshold lock is a "very large tax increase" and a "seismic" change to the tax system. The Sunday Telegraph’s Liam Halligan calls the freeze on thresholds “the ultimate stealth tax,” adding that it serves as a “huge disincentive to work, just when the economy desperately needs to get moving.” He goes on to suggest there is a need to “escape this high-tax, low-growth trap.”