Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

More Britons to pay top income tax rate in budget squeeze

Economy Nov 17, 2022 09:37AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Britain's Chancellor of the Exchequer Jeremy Hunt walks at Downing Street in London, Britain, November 17, 2022. REUTERS/Peter Nicholls

By Andrew MacAskill

LONDON (Reuters) -More Britons will pay the top rate of income tax under government plans announced on Thursday to freeze allowances and lower the level at which people start to pay the highest rate as part of measures to stabilise public finances.

Finance Minister Jeremy Hunt said that the newly-installed Conservative government of Prime Minister Rishi Sunak is "asking more from those who have more" as he also set out plans to freeze national insurance and inheritance tax thresholds.

Hunt said the government would freeze income tax allowances until 2028 and was lowering the threshold above which the 45% top rate of income tax is paid to 125,140 pounds ($148,053) from 150,000 pounds.

The result of the changes is that the income of many more Britons will fall into the new thresholds and end up paying more tax because of the effects of inflation.

"We will still have the most generous set of tax-free allowances of any G7 country," Hunt told parliament in a speech aimed at restoring market confidence in the government's finances after the 50-day premiership of Liz Truss.

Her government had said it would abolish the top rate of income tax, before reversing course amid financial turmoil triggered by her plans. She was forced to resign last month and was replaced by Sunak as prime minister.

The Conservatives pledged in their election manifesto 2019 not to raise income tax or national insurance rates.

Hunt said that although his announcement will lead to "substantial" tax rises, the government had not raised the headline rates of taxation.

MORE TAXPAYERS

Anthony Whatling of Evelyn Partners, a professional services firm, said a quarter of a million more people in Britain would pay the top rate tax as a result of the government's change.

The Office for Budget Responsibility (OBR), Britain's independent fiscal watchdog, said the decision to freeze income tax allowances would raise an extra 26 billion pounds for the government by the financial year 2027-2028.

The OBR said it estimated that there would be 3.2 million new taxpayers created by the now six-year freeze on the personal allowance.

It said the freezes takes the real value of the personal allowance in 2027-28 back to its 2013-14 level.

In addition to the income tax changes, the government also said it would cut the amount shareholders can earn in dividends before they begin paying tax from 2,000 pounds ($2,366) now to 1,000 pounds next year and 500 pounds from 2024.

The amount people can claim tax-free for capital gains will fall from 12,300 pounds currently to 6,000 pounds next year and 3,000 in 2024, Hunt said.

($1 = 0.8452 pounds)

More Britons to pay top income tax rate in budget squeeze
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email