Number of Higher Rate Taxpayers Soars

Number of Higher Rate Taxpayers Soars.

Having passed the 6^th April, we are now in a new tax year and many of you are looking forwards to your first pay packet of the new tax year.

Many get excited by the headlines that personal allowances, the first tier of income that is tax free,  have increased from £9,440 (2013/14) to £10,000 (2014/15) thinking that we will earn more.

The reality is that an estimated 4.4 million people are now higher rate tax payers and over 300,000 people are in the additional rate of tax at 45%.

Stealth austerity means that there are an estimated 1million more higher rate tax payers since 2012, 30% more from 30 years ago and an estimated 5.5m million by 2015/16.

Comment

The Labour party has always claimed it taxes those that can pay to help those that cannot.  The reality is it is a Conservative lead government that tend to tax more widely.

What does this mean?

This means that of the estimated 34 million working people in the UK, around 1 in 7 are now higher rate tax payers.  This could mean 1 in 4 households.  As a knock on, it probably means 1 in 5 or 1 in 6 households also lose or have reduced child benefit.

The solution is that with the correct financial planning and advice, we can all reduce tax bills of even reduce income indirectly by using our allowances to become basic rate tax payers.  Pensions, ISAs, Enterprise Investment, Venture Capital, using inter-spousal gifting and allowances can all help with reducing your tax liability.  Contact us for professional advice.