Higher earners already face a disproportionately high tax burden, says Rathbones, amid fears that the new Prime Minister may introduce new taxes on wealth.
Using current income tax rates, Rathbones calculates that someone earning the median full-time salary of £39,039 would pay around £5,294 in income tax each year. By comparison, an individual earning £150,000 would pay £53,703.
It means someone earning £150,000 receives 3.8 times the income of a median full-time worker yet pays more than 10 times as much income tax.
Over four years, someone earning £150,000 would pay more than £214,800 in income tax, roughly the same amount a median full-time worker would pay over 40 years.
Additionally, the wealth manager estimates that someone earning £120,000 would pay around 7.45 times as much income tax as a median earner, while an individual earning £80,000 would pay 3.67 times as much.
The findings come as frozen tax thresholds continue to draw more people into higher tax bands. According to HMRC, the number of higher-rate taxpayers will reach 7.7 million in 2026/27, while the number of additional-rate taxpayers is expected to rise to 1.29 million.
Jay Lawrence, investment director at Rathbones, said: “The UK has a highly progressive income tax system that relies heavily on a relatively small group of higher earners. At the same time, inflation and frozen tax thresholds have steadily chipped away at the real-world value of a six-figure salary. Many people are finding themselves pushed into higher tax bands without experiencing a corresponding improvement in their standard of living.”
Rathbones said that its own analysis suggests that more than £100 billion of wealth could be diverted overseas or moved into less productive assets if the UK were to introduce a wealth tax.
The analysis also suggests a wealth tax would cost the Government around £600 million to establish, while imposing ongoing compliance and administrative costs on taxpayers of £700 million a year or more.
Lawrence added: “Many of our clients are concerned that they could bear a growing share of the tax burden as the Government looks to fund its spending commitments while operating within tight fiscal constraints.
“We have encountered highly paid professionals who are reviewing their long-term tax position, including the possibility of relocating to more tax-efficient jurisdictions, and the introduction of a wealth tax risks creating similar questions for entrepreneurs.
“If policies result in highly skilled workers, entrepreneurs and investors choosing to leave the UK, that risks undermining the Government’s broader objectives of boosting growth, attracting investment and improving the country’s long-term economic prospects.”
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