Stealth tax raids on the middle class: 2 million people are being dragged into higher payment slots as Rishi Sunak faces demands on a tax cut schedule
- One in five taxpayers is expected to soon pay a tax rate of 40% or 45%
- Prime Minister Rishi Sunak froze income tax bases until 2026 last year
- It is estimated that about 6.1 million people will pay the highest amount this year, almost double that of 2010.
Rishi Sunak faced increasing pressure to schedule tax cuts last night after millions of middle-class families were hit by higher bills.
The stealth tax raid has dragged nearly two million people into the higher income tax range since the last election.
The total will surge further, with one in five taxpayers expected to soon pay a tax rate of 40% or 45%.
Last year, Prime Minister Snack frozen the income tax base until 2026. The move has been criticized as a substantial tax cut for millions of families who have already suffered rising living costs.
Rishi Sunak faced increasing pressure to schedule tax cuts last night after millions of middle-class families were hit by higher bills.The stealth tax raid has dragged nearly two million people into the higher income tax range since the last election.
When Boris Johnson won the 2019 general election, about 4.3 million people were paying an additional income tax of 40p higher or 45p.
This is currently projected to reach a record high of 6.1 million this year, almost doubling that of 2010.
Experts warned that by 2024 it could reach more than 7 million people. That is, according to the pension consultant LCP, one in five taxpayers has a higher tax rate, an increase of about 70% in this parliament.
As fears of the party losing its low tax reputation increased, it prompted Tory lawmakers to call for tax cuts.
The problem is that the starting point for high tax rates is not keeping up with rising incomes. The five-year freeze on the threshold supercharged this trend and created “financial resistance.”
And things can get worse as wages and pensions are set to rise rapidly with inflation.
When Boris Johnson won the 2019 general election, about 4.3 million people were paying an additional income tax of 40p higher or 45p. This is currently projected to reach a record high of 6.1 million this year, almost doubling that of 2010.
Sir Steve Webb, LCP’s partner and former pension minister, said:
“People who don’t think they’re particularly wealthy can now easily face a 40 percent income tax rate.”
Tory MP Melstride, chairman of the Commons Finance Commission, said the prime minister had “limited” room for tax cuts until inflation subsided, adding: It reduces the burden. “
Tory lawmaker Marcus Fysh said:
Sarah Colles, Senior Personal Finance Analyst at online broker Hargreaves Lansdown, said:
She added:
In 2019/2020, 31.5 million people were paying income tax. According to HMRC, this is expected to increase from 2.5 million to 34 million by 2022/2023.
About 80% pay a basic 20% tax rate. People with a higher tax rate of 40% are projected to reach 5.5 million in the 2022/2023 tax year, an increase of 44% over three years.
The number of top-income earners paying 45% income tax is expected to increase by almost half to 629,000 over the same period.
The duty-free personal allowance is £ 12,570. A 40% higher rate starts with a salary of £ 50,270 or more, and a further 45% rate goes to £ 150,000. According to the latest figures from the National Bureau of Statistics, average wage growth was 6.8% year-on-year.
Therefore, according to AJ Bell’s calculations, someone at £ 47,500 last year is now in the higher tax rate range.
When asked if the government would cut taxes by next year, Boris Johnson said: That would be a big tax cut. “
But it’s a “fairy tale” that the government thinks it could cut taxes in light of spending pressure, said Paul Johnson, a think tank at the Institute for Fiscal Studies.