750,000 - How many more people will be hit by the higher tax rate

750,000 - How many more people will be hit by the higher tax rate

by Elizabeth Anderson
Last Updated: 09 Oct 2013

The middle class is about to be squeezed even harder, the Institute of Fiscal Studies (IFS) is warning.

Around 750,000 more people will move up into the 40% income tax bracket from April, when the threshold is lowered from its current level of £37,401 to £35,001 a year. A further 175,000 poor souls will also see their effective marginal tax rise from 30% to 70%, due to the reduction in the point at which child tax credit starts to be withdrawn, along with rises in National Insurance contributions.

While it’s a complex set of reforms, the likelihood is that they’ll hit the ‘squeezed middle’ hardest – especially those with children. And that’s before the child benefit is withdrawn for higher-rate taxpayers, in 2013. But Chancellor George Osborne says there’s no plan B: ‘I feel every day a huge responsibility to get these decisions right for Britain’ he told the BBC at the weekend. We’re all in this together, and so on and so forth…

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