IFS: Higher tax rate to hit 750,000 more people
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 £35,001 from £37,400 on 5 April – with the IFS estimating that the average household will be £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 £1,000 increase in the amount people can earn tax-free, raising the threshold to £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.