Publication featured in: The Express
Income tax bills have jumped 12% to a record £262bn in the past year*, up from £233bn the year before.
Neela Chauhan, tax partner in our London office, says the latest figures show recent changes to income tax are driving the increase.
The top rate of income tax – 45% – now applies to anyone earning over £125,140 a year. Before April 2023, the threshold for the top rate was £150,000. This threshold change is estimated to have pushed 629,000 taxpayers into the top band of income tax.
Neela Chauhan claims that “Expanding the top-rate taxpayer pool is clearly having an impact.”
“The Government has been looking for a way to raise revenue and they have found it.”
“The latest income tax figures will be feeding calls for concessions. If not outright tax cuts, then at least raising the point at which the higher rates of income tax come into effect with inflation.”
“Taxpayers are realising that a lot of their income is now being lost to fiscal drag.”
“With record income tax revenues, raising the threshold for the top rate of income tax is once again a feasible – and politically tempting – option.”
*Year end September 30.