Frozen income tax thresholds introduced in 2021/22 have seen seven million people dragged into the income tax net, according to analysis published by AJ Bell.

In the 2025/26 tax year there were 40 million income taxpayers – up 1.3 million in a year. The number of income taxpayers is set to keep rising until the end of the freeze – currently scheduled for 2031.

Furthermore, in 2025/26, 32,000 estates were liable for inheritance tax (IHT) at death, up by 5,000 since the inheritance nil rate band and residential nil rate band were first both at their current level in 2020/21. The number of estates paying inheritance tax at death is also expected to jump by 10,500 in 2027/28.

AJ Bell head of personal finance, Sarah Coles, said: “As people have received pay rises or inflation-linked pension increases, millions have been dragged into paying tax. This includes an awful lot of pensioners living on very modest personal or workplace pensions.

“The fact that so many more people are paying tax – and so many more doing so at higher rates – means it’s worth considering ways to keep income tax to a minimum. This could include making pension contributions and getting tax relief at your highest marginal rate. It might mean using a cash ISA to protect your savings interest from tax. If changing tax brackets means paying more tax on your investments, a stocks and shares ISA will protect you from dividend and capital gains tax.”

Commenting on IHT, Coles stated: “IHT still only affects those leaving large estates – especially if they are part of a married couple and leaving a property to children. However, 5,000 more estates than in 2020/21 are now getting a tax bill each year, so it’s worth considering whether you can make any gifts during your lifetime to reduce a potential tax bill.”

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