An Extra 5M People To Pay Higher-Rate Tax

[White Craw]

http://www.telegraph.co.uk/finance/personalfinance/how-budget-affect-me/7855660/An-extra-5m-people-to-pay-higher-rate-tax.html

Haven't seen or heard a lot of comment about this.

[spongeh]

erm isnt that wrong though?

More than 700,000 will be dragged into the higher tax net because from next April the threshold for the 40pc tax rate will be reduced by £1,500 to £42,375.

but from the HMRC site http://www.hmrc.gov.uk/paye/rates-thresholds.htm

PAYE tax threshold £125 per week

£540 per month

£6,475 per year

Basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,400

Higher tax rate 40% on annual earnings from £37,401 to £150,000

Additional tax rate 50% on annual earnings above £150,000

The higher 40% tax band kicks in at £37,401, the Class 1 NIC upper earnings limit is £43,875.

[righttoleech]

erm isnt that wrong though?

More than 700,000 will be dragged into the higher tax net because from next April the threshold for the 40pc tax rate will be reduced by £1,500 to £42,375.

but from the HMRC site http://www.hmrc.gov.uk/paye/rates-thresholds.htm

PAYE tax threshold £125 per week

£540 per month

£6,475 per year

Basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,400

Higher tax rate 40% on annual earnings from £37,401 to £150,000

Additional tax rate 50% on annual earnings above £150,000

The higher 40% tax band kicks in at £37,401, the Class 1 NIC upper earnings limit is £43,875.

£37,401 of taxable income.....plus the personal allowance of £6475......they aligned NIC upper limit with income tax not long ago.

[White Craw]

erm isnt that wrong though?

More than 700,000 will be dragged into the higher tax net because from next April the threshold for the 40pc tax rate will be reduced by £1,500 to £42,375.

but from the HMRC site http://www.hmrc.gov.uk/paye/rates-thresholds.htm

PAYE tax threshold £125 per week

£540 per month

£6,475 per year

Basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,400

Higher tax rate 40% on annual earnings from £37,401 to £150,000

Additional tax rate 50% on annual earnings above £150,000

The higher 40% tax band kicks in at £37,401, the Class 1 NIC upper earnings limit is £43,875.

I think the Telegraph is confusing gross pay and earnings above the personal allowance (see below).

But the reduction in higher rate threshold is real enough.

from http://www.hm-treasury.gov.uk/d/junebudget_complete.pdf

(Warning: 2.75MB)

1.93 The Government is committed to increasing support for lower and

middle income earners and improving the rewards to work, and has a long

term objective to raise the personal allowance to £10,000 with real terms

progress towards that goal every year. This Budget announces that the

personal allowance for under 65s will be increased by £1,000 to

£7,475 in 2011-12. As a result, the Government estimates that the 880,000

lowest income taxpayers will be removed from tax altogether, and 23 million

taxpayers will benefit by up to £170 per year.26

1.94 To ensure that support will be focused on those on low and

middle incomes the Government will reduce the level of the basic

rate limit. The National Insurance Upper Earnings/Profit Limit will

also be reduced to keep it aligned with the income tax higher rate

threshold. Based on current Retail Prices Index (RPI) forecasts the basic rate

limit will be reduced by £2,500 and the higher rate threshold by £1,650

below plans the Government inherited. Exact figures will be confirmed in the

autumn. These changes will mean that higher rate-taxpayers will not benefit

from this measure.

£37,401 of taxable income.....plus the personal allowance of £6475......they aligned NIC upper limit with income tax not long ago.

Yes this is where I think the Telegraph's figures came from.

[spongeh]

Yup that all makes sense now