Current higher rate taxpayers to pay £80 more tax next year?

intalex

Just noticed that while the tax-free personal allowance has been raised by £1000 (i.e. saving of £200 per year), the higher rate (40%) threshold has been lowered by £2400, i.e. the band width reduced by £1400 (i.e. £280 more tax per year). This means £80 more tax overall from next year.

Apparently, with the NI increase, it is estimated that higher rate tax payers will face hundreds more compared to this year in salary deductions over next year. Higher VAT, higher inflation, and lower take-home pay to make it even more challenging.

ranger1066

intalex wrote: »

Just noticed that while the tax-free personal allowance has been raised by £1000 (i.e. saving of £200 per year), the higher rate (40%) threshold has been lowered by £2400, i.e. the band width reduced by £1400 (i.e. £280 more tax per year). This means £80 more tax overall from next year.

Apparently, with the NI increase, it is estimated that higher rate tax payers will face hundreds more compared to this year in salary deductions over next year. Higher VAT, higher inflation, and lower take-home pay to make it even more challenging.

Cut back, just as us on lower wages have to.

zagfles

The NI UEL is aligned to the HRT threshold so this is going down by £1400 a year also - which will save higher rate taxpayers £140 a year in NI.

Of course they'll still pay more NI because of the rate rise, but the specific policy of lowering the higher rate threshold was designed to neutralise the increase in personal allowance for higher rate taxpayers. They are a bit better off but that's just the inflation increases in the thresholds.