750,000 brought into higher rate tax band
IFS finds income tax changes bring more people into higher rate band
AROUND 750,000 more people will be higher rate taxpayers due to changes in the income rate bands to be introduced in April this year, analysis has shown.
The findings form part of the Institute for Fiscal Studies’ Green Budget, which will be launched on 2 February. The changes will decrease the level of income at which the highest rate takes effect.
The Green Budget states that a further 850,000 would be brought into this higher rate bracket by 2014/15 if the government reaches its marginal tax rate targets.
The institute also calculated that the richest tenth of the population will lose out due to the new 50p tax rate on incomes above £150,000 and the loss of personal tax allowance for all those with incomes above £100,000.
The group – which includes single people without children earning more than £40,000 and single-earner couples with two children earning more than £100,000 – will face an increase in its effective marginal tax rates from just over 30% to more than 70%.