You The Taxpayers to face the highest Tax Burden for 30 years
The Institute for Fiscal Studies have recently claimed that UK taxpayers are facing the highest Tax Burden for 30 years.
Over 37% of Britain’s National Income will be drawn from your tax receipts for the first time since 1986. These tax increases derive from a number of new legislations such as higher tax on dividend income, increase in tax on insurance premiums, higher vehicle excise duty and a new restriction on pension contributions for those on very high incomes.
Hundreds of thousands of people, are suddenly paying a higher rate of tax as the threshold has failed to keep up with rising inflation, however the government have pledged to increase the threshold at which the higher rate of income tax is paid to £50,000 by 2020.
The report has likewise said that £17bn of tax rises could be needed to contribute to bridging the gap between government income and outgoings.
Income tax rates have risen steadily over recent years, meaning higher earners are paying an ever increasing proportion of the state’s total tax receipts. For example, the comparable rates for Income Tax Allowances and Income Tax Rates across the 2016 / 2017 and 2017 / 2018 are as follows:
- The personal allowance will increase from £11,000 in 2016 / 2017 to £11,500 in 2017 / 2018.
- The basic rate limit will be increased to £33,500 in the new tax year from the £32,000 as it currently stands and as a result of this, the higher rates threshold will increase to £45,000 from April 2017.
We can see this as a positive step towards the government’s commitment to raising the personal allowance to £12,500 by the end of this parliament. This will rise in line with the consumer prices index measure of inflation, rather than the National Minimum Wage. Chancellor Philip Hammond has said that this will bring the way the allowance is increased into line with the higher-rate threshold.