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effective marginal tax rise from 30% to 70%, due to the reduction in the point at which child tax credit starts to be withdrawn, along with rises in National Insurance contributions.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 And that’s before the child benefit is withdrawn for higher-rate taxpayers, in 2013.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…

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Reopening: Your duty is not to the economy, it’s to your staff

Managers are on shaky ground if they think they can decide for people what constitutes...

How COVID changes the world forever: A thought experiment

Silicon Valley ‘oracle’ Tim O’Reilly imagines how different sectors could emerge from the pandemic.

The CEO's guide to switching off

Too much hard work is counterproductive. Here four leaders share how they ease the pressure....

What Lego robots can teach us about motivating teams

People crave meaningful work, yet managers can so easily make it all seem futile.

What went wrong at Debenhams?

There are lessons in the high street store's sorry story.

How to find the right mentor or executive coach

One minute briefing: McDonald’s UK CEO Paul Pomroy.