GEORGE OSBORNE has been lambasted for making ‘unimaginative’ tax changes in last week’s Budget which could drag millions of workers into a a higher rate tax band.
In a move to offset the cost of increasing the personal tax allowance the government is to lower the threshold at which people enter the 40p tax band from next year.
According to Stephen Herring, senior tax partner at BDO, Osborne has ‘missed a trick’ by lowering the point at which people enter the 40p band from earnings of £42,475 to £41,450.
“The continual raiding by the chancellor and his predecessor of the basic rate tax band has meant that the oft-cited ‘squeezed middle’ continues to be ignored,” Herring said.
“By not introducing another 25% or 30% tax band before the 40% level is reached, he has failed to restore incentives and fairness for the increasingly ignored middle income group. The coalition government must exercise more imagination in future budgets if the income tax system is to be properly responsive to fairness across the whole income spectrum.”
Last week, The Institute of Fiscal Studies estimated that the government’s decision to lower the threshold could mean that the number of people paying 40% tax could rise from 3.7 million in 2011 to five million by 2014.
HMRC has outlined a change in VAT policy to the treatment of dwellings that have been formed from either the construction of new buildings, or from the conversion of non-residential buildings
Let us hope that valuable asset protection vehicles are not made prohibitively burdensome or abolished in the desire to “simplify” IHT
The government is pressing ahead with changes to the way it taxes individuals with a foreign domicile
I will feel slightly awkward when I write to the client who is about to receive a large invoice from the PAYE expert, offering him the fee protection going forward