Record number paying 45p top tax rate

The number of people paying the top 45p rate of tax has increased 33% over the last five years and is now at record high levels, figures show.

Data from HMRC show 364,000 workers will be paying the top rate of tax in 2017/18 - up 54% since the band was introduced seven years ago.

Wage inflation and reducing the pension tax relief for higher earners are thought to be the largest factors behind the increase.

The threshold for the "additional rate" of tax has remained at £150,000 since it was introduced - with Labour suggesting this should come down to £80,000 should it win the General Election.

Other figures in the HMRC report show the number of basic rate taxpayers has remained steady over the last four years and is expected to be 25,200,000 this year, while the number of people paying the higher rate of 40p is expected to drop around 4% to 4,160,000 in 2017/18.

Tom McPhail, head of policy at Hargreaves Lansdown, told the Telegraph: "The 45% rate is now trapping high earners just as the 40% rate did in the past.

"High earners are already contributing a larger proportion of income tax than ever before and cuts to pensions have unfairly removed their opportunity for them to use tax efficient savings products to reduce their tax bill."