Three quarters of a million people will have to pay income tax of 40% for the first time under Government reforms.
Around 750,000 people will start paying tax of 40% on their earnings from April 5 due to the decision to reduce the threshold at which the higher rate kicks in to ?35,001, from ?37,400 this year, according to the Institute for Fiscal Studies (IFS (E1:I49.SI - news) ).
But around 500,000 people will be lifted out of paying income tax altogether, as a result of the ?1,000 increase in the amount people can earn tax-free, raising the threshold to ?7,475.
And the body warns that we all face being ?200 worse off this year - with higher income households being hit the hardest.
The Government is also increasing the main rate at which National Insurance is charged from 11% to 12% from the start of the new tax year, while people will also be charged 2% not 1% on earnings above ?42,484.
The changes are bad news for households, with many families already struggling in the face of high inflation and no prospect of an increase in wages.
The IFS said the reforms would hit higher income households the hardest.
Some people in this group are also likely to be affected by the new restrictions on how much can be paid into a pension tax-free each year.
It estimates that the richest 10% of people will lose 3% of their net income from April 6, compared with a 1% loss for the population as a whole.
Those with the highest incomes have already been hit by the new 50% tax rate for people earning more than ?150,000 and the loss of the personal tax allowance for those on more than ?100,000.
Those claiming benefits are also likely to be hit by the Government's decision to increase payments in line with inflation as measured by the Consumer Prices Index, rather than the Retail Prices Index, which tends to be higher.
James Browne, a senior research economist at the IFS, said: "Further reductions in household income are inevitable as Government policies aimed at helping to reduce Government borrowing from its post-Second World War high are introduced."
Around 750,000 people will start paying tax of 40% on their earnings from April 5 due to the decision to reduce the threshold at which the higher rate kicks in to ?35,001, from ?37,400 this year, according to the Institute for Fiscal Studies (IFS (E1:I49.SI - news) ).
But around 500,000 people will be lifted out of paying income tax altogether, as a result of the ?1,000 increase in the amount people can earn tax-free, raising the threshold to ?7,475.
And the body warns that we all face being ?200 worse off this year - with higher income households being hit the hardest.
The Government is also increasing the main rate at which National Insurance is charged from 11% to 12% from the start of the new tax year, while people will also be charged 2% not 1% on earnings above ?42,484.
The changes are bad news for households, with many families already struggling in the face of high inflation and no prospect of an increase in wages.
The IFS said the reforms would hit higher income households the hardest.
Some people in this group are also likely to be affected by the new restrictions on how much can be paid into a pension tax-free each year.
It estimates that the richest 10% of people will lose 3% of their net income from April 6, compared with a 1% loss for the population as a whole.
Those with the highest incomes have already been hit by the new 50% tax rate for people earning more than ?150,000 and the loss of the personal tax allowance for those on more than ?100,000.
Those claiming benefits are also likely to be hit by the Government's decision to increase payments in line with inflation as measured by the Consumer Prices Index, rather than the Retail Prices Index, which tends to be higher.
James Browne, a senior research economist at the IFS, said: "Further reductions in household income are inevitable as Government policies aimed at helping to reduce Government borrowing from its post-Second World War high are introduced."
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