One in six people in the UK have turned down or hesitated over a pay rise, bonus, or promotion, fearing they would lose money, according to a new survey by pension provider Standard Life. An additional 21% stated they would consider doing the same in the future for the same reasons.
The findings follow five years of frozen income tax thresholds, which have resulted in more workers being pushed into higher tax bands as wages increase. HMRC figures show the number of UK income taxpayers has risen by 24% since 2021-22, reaching an estimated 40.8 million this financial year. The number of higher-rate taxpayers has seen a 74% increase over the last five years, from 4.43 million to 7.7 million.
Younger workers, specifically Gen Z (under 30), are most likely to hesitate, with 28% reporting they have done so. This compares to 19% of Millennials (30 to 45) and 10% of Gen X (46 to 61). Parents with children under 18 are also more likely to have hesitated, at 22%, with 9% concerned about losing childcare support. For single parents, childcare support is withdrawn if earnings exceed £100,000.
Ways to potentially reduce a tax bill include contributing to ISAs, premium bonds, or pension schemes. For example, a basic-rate taxpayer receives 20% tax relief on pension contributions, while higher and additional-rate taxpayers can claim further relief via self-assessment.