A Higher Rate Taxpayer Weekly Lottery

More and more people in the UK are being pulled into the 40% rate tax band as their incomes tip over £50k per year and tax bands remain frozen despite increasing inflation.

This can lead to resentment, especially among groups such as the High Earners Not Rich Yet (HENRYs).

A simple and low-cost way to help soften the pill would be to create a higher-rate taxpayer weekly lottery.

There would be one thousand £1,000 prizes available each week for any higher-rate taxpayer that signed up to the lottery (signup would be online and free).

The lottery would have a slight difference, however; the money would have to be spent within one week of receipt, and all in one go. Any money not spent would return to the HMRC.

This would create a significant boost to spending as people invariably went out and purchased an item over £1,000 to make sure they got full value, helping to boost spending in the economy.

The entire project would cost £52 million per year, a rounding error in government spend but something which could have a disproportionate positive impact on the perception of being a higher-rate taxpayer, as the government finally showed some gratitude towards those who pay the most tax in the UK.

Some behavioural insights could increase the impact still further, such as by giving each taxpayer a number they must check against results each week in an app to claim, making it a visible social action to display wealth.

Taxpayers could also get a separate code for each year they have been a higher-rate taxpayer, getting more weekly entries as a result, and incentivising people to stay as a higher-rate taxpayer because they wouldn’t want to lose those extra tickets.

A simple, low-cost solution to make taxpayers happier and inject spend into the UK economy.