Over a million more dragged into 40% rate by 2026

Someone who takes home £40,000 a year today will exceed the threshold for 40% income tax within the next four years if wage growth continues at its present rate of 7.4% a year, new figures have shown. More modest wage growth of 3% a year will still result in someone who earns £45,000 a year paying the 40% rate by 2024, according to AJ Bell. More than a million people will be dragged into the higher rate bracket because both the £12,570 personal allowance and the £50,270 higher-rate tax threshold have been frozen until 2026. The number of people who pay the higher rate has roughly trebled in three decades as middle earners have seen more of their income taken by the state.

 

The Sunday Telegraph

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
↑