IFS: Higher tax rate to hit 750,000 more people

| January 31, 2011

Respected think tank, the Institute for Fiscal Studies (IFS), has today revealed three quarters of a million people will become higher rate taxpayers from April.

The earnings threshold will be lowered to A?35,001 from A?37,400 on 5 April – with the IFS estimating that the average household will be A?200 worse off.

The study from the IFS is published on the day of the Self Assessment tax deadline.

However, approximately half a million people will not have to pay tax at all as a result of the A?1,000 increase in the amount people can earn tax-free, raising the threshold to A?7,475.

Meanwhile, the Government is also increasing the main rate at which National Insurance is charged.

Both sets of changes will be a blow to families already struggling with higher inflation and spending cuts.

The decision to raise taxes and National Insurance comes as the Government introduces tough austerity measures – designed the bring the spiralling budget deficit down.

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