Higher Taxpayer-Rate To Be Implemented by 2027

By 2027, one in five taxpayers will pay more than the base 40% income tax, according to a study by the Institute for Fiscal Affairs (IFS), and personal benefits will remain frozen.

The Taxpayer ( Photo: Trade Brains )

Additional 2.5 million people have to pay tax rates of 40% or more by 2027-2028

The story of the last 30 years has been one of the higher rate tax going from being something reserved for only the very richest, to something that a much larger proportion of adults can expect to encounter. Alongside the fact that 1.7 million people will be paying marginal rates of 60% and 45% in the next few years. Prime Minister Jeremy Hunt says action is needed to repair the damage done to the public finances of the coronavirus pandemic,  The Office of Budget Responsibility, the independent body that prepares the government’s economic forecasts, said the tax share of national income was at the highest level in 70 years.

No nurses and only 5-6% of mechanics, electricians, and teachers paid high-income tax rates

The report said the failure of tax allowances and thresholds to keep pace with inflation “the process known as fiscal drag” had resulted in a “seismic shift” to the system and would be a big cause of the record fall in living standards this year. A third of the expected fall in household incomes was because of tax allowances and thresholds being frozen. The report said that in the early 1990s, no nurses and only 5%-6% of machinists, electricians, and teachers paid higher-rate income tax. But by 2027-28, more than one in eight nurses, one in six machinists and fitters, one in five electricians, and one in four teachers will be higher-rate taxpayers.

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