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Growth in the number paying 40p tax rate

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12/03/2014

 

40p tax rate set to claim 1 million

Members of the UK200Group of independent chartered accountancy and lawyer firms have today commented on concerns that more middle income earners will be drawn into the 40p tax band following next week’s Budget.

The government reportedly plans to increase the income tax threshold from £10,000 to £10,500 in next week's Budget and some experts have suggested Chancellor George Osborne will fund the rise by bringing more people into the 40p rate.

The Institute for Fiscal Studies says that a one per cent rise in the 40p threshold would bring another 400,000 people into that rate, making a total of 1.1 million more upper rate taxpayers since 2010.

David Ingall, past UK200Group president

“It is a reflection on our society that so many people fall into the higher rate of tax. Certainly, where there is a single earner in a family, with perhaps three children, who earns sufficient to get into the 40 per cent rate, those tax rates probably bear unduly on that family.

 “But the whole of taxation needs reviewing as there are all kinds of injustices and unfairness from one point of view or another. Is taxation a method of collecting revenues for the common good or is it an instrument of social engineering? Therein lies the problem.

“Politically now is not the time to make major concessions on higher rates but in the longer term that must b e  the objective. Smaller government, rather than the bloated, money-gobbling machine we currently have, is the way to fund that.”

Cormac Marum, former inspector of tax and head of tax advisory at UK200Group member firm Harwood Hutton

“The coalition may have taken nearly two million people out of paying income tax by raising the personal allowance but this still leaves the vast majority of them paying national insurance. It is actually misleading to say that all of those two million have been taken out of the tax system. National insurance feels just as much a tax as income tax.

“The coalition has only managed to raise the personal allowance so much by narrowing the basic rate tax band. This has resulted already in over 700,000 extra workers being dragged into the 40 per cent tax bracket with the prospect of 400,000 more to come. 

“Had the 40 per cent tax threshold kept pace with inflation since the last general election, it would now stand at £50,000. Anyone with income of between £41,865 (the threshold for the 2014-15 tax year) and £50,000 ought to keep this coalition policy in mind when they are asked to vote at the next general election.”

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Established in 1986, UK200Group is the leading mutual professional association in the UK with some 150 offices of quality-assured member accountancy and lawyer firms throughout the UK totalling over 550 partners, 150,000 business clients and global links in over 50 countries. UK200Group provide services and products that are designed to enhance the business performance of its members.  Telephone 01252 401050, email admin@uk200group.co.uk or visit www.uk200group.co.uk 

Disclaimer:

UK200Group is an association of separate and independently owned and managed accountancy firms and lawyer firms. UK200Group does not provide client services and it does not accept responsibility or liability for the acts or omissions of its members.  Likewise, the members of UK200Group are separate and independent legal entities, and as such each has no responsibility or liability for the acts or omissions of other members.

 


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