Wage inflation means more paying higher tax and losing benefits

The Institute for Fiscal Studies (IFS) has warned that more people are being dragged into higher tax brackets but are left no better off due to inflation and the loss of child benefit payments. The proportion of people losing child benefit because they earn more than £50,000 was about 13% in 2013 but will soon be 20%, while the number of people losing their tax-free allowance because they are paid over £100,000 is about 1m now – 50% more than at the end of the last decade. Paul Johnson, head of the IFS, commented: “They are paying a 62% marginal rate on more than £20,000 of income. That is a big structural change to the tax system which has just happened as a result of inflation.” A third more Britons earn more than £150,000 than in 2011. Up to £1bn a year may have been raised from top earners because of this, the IFS estimates. If thresholds had risen in line with inflation they would be £120,000 and £180,000.

The Daily Telegraph, Business, Page: 1 The Times, Page: 2

 

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