Chancellor’s freeze to pull 5m into income tax net

More than 5m lower-paid workers who currently pay no income tax will be pulled into the system over the next four years if inflation remains high, forcing them to pay tax at 20% on some of their earnings. The Centre for Economics and Business Research (CEBR) analysis also shows that around 4m UK-based workers will be pulled into the 40% tax band. This, the think-tank forecasts, will generate an additional £40bn in tax receipts for the Treasury. This comes on the back of Chancellor Rishi Sunak’s decision to freeze personal allowances. The CEBR has warned that a recent surge in inflation means the impact of the freeze is set to be significantly higher than initially calculated. CEBR deputy chairman Douglas McWilliams commented: “This is a £40bn tax rise originally planned to raise £8.2bn. It is absurd. This stealth tax rise should be reversed.”

 

The Mail on Sunday

 

Related Post

Reeves urged to abolish the £175,000 residence nil-rate band The Chancellor is facing pressure to eliminate the £175,000 residence nil-rate band in her upcoming Budget. Rachel Reeves previously argued that this allowance, which costs around £2bn annually, primarily benefits the wealthy and now the Resolution Foundation is pushing her to scrap it. In 2011, she stated: “Raising the inheritance tax limit to £1m for […] By Lisa Brownlow, 18 September 2024
Read Now
Small firms responsible for 80% of tax evasion Analysis by the National Audit Office (NAO) shows that small firms are responsible for more than 80% of tax evasion. The report cites HMRC estimates that £5.5bn was lost to deliberate tax evasion in the 2022/23 financial year, with small businesses responsible for 81% of the total. Despite a reduction in the overall tax gap […] By Lisa Brownlow, 16 September 2024
Read Now
Threshold freeze creates 4.4m more taxpayers The number of people paying income tax has increased by 4.4m in three years due to the freeze on thresholds, according to HMRC data. The figures also show that the decision to freeze the personal threshold at £12,570 has pulled an additional 1.77m pensioners into the income tax bracket. There are currently an estimated 37.4m […] By Lisa Brownlow, 3 July 2024
Read Now
↑