Caught in the higher-rate taxpayers rise?

Post by Mearns & Company in News

Are you part of new HMRC statistics showing an increase in higher-rate taxpayers?

The latest set of HMRC statistics on income tax gives an insight into how the freezes on the personal allowance and higher rate tax threshold are affecting taxpayers. They also offer initial evidence of what April’s near £25,000 cut in the additional rate (top rate in Scotland) threshold means:

• After remaining largely unchanged in the last half of the 2010s, the number of income taxpayers has jumped by over four million in the past three years, because incomes have risen but the personal allowance has not.
• As the taxpaying population has increased, so has the share of taxpayers paying tax at the higher or additional/top rates. HMRC estimates this will be 18.0% in the current tax year, up from 13.9% in 2020/21 and 10.4% in 2010/11.
• Additional/top rate taxpayer numbers are projected to rise by over half in 2023/24.

These impacts are not immediately visible as the numbers that set the income tax framework are unchanged. In effect the Chancellor has delegated the task of raising extra revenue to inflation. And inflation has obliged, all too well.

If you want to limit your income tax bill, talk to us about the options that are available.

The Financial Conduct Authority does not regulate tax advice. Tax treatment varies according to individual circumstances and is subject to change.