How 750,000 people will be dragged into paying
higher rate tax... and families with children will the the brunt
By James Chapman
Last updated at 12:52 AM on 31st January 2011
Stark warning: George Osborne warned some basic rate taxpayers will lose 73p in every extra pound they earn
Families with children will be hardest hit by the Government’s tax and benefit changes, a major report reveals today.
And at least 750,000 people will be dragged into paying the higher rate of income tax.
The report from the Institute for Fiscal Studies also says marginal tax rates – the amount lost in tax and withdrawn benefits as people earn more – will increase for more than 22million people from April.
Some basic rate taxpayers will lose 73p in every extra pound they earn as they pay more in tax and National Insurance and tax credits are withdrawn.
A small number of higher-rate taxpayers will lose 83p in every extra pound.
Families with children at almost every point of the income scale will be harder hit than pensioners or workers without children, the report says.
The top 10 per cent of earners with children – those on around £45,000 or more – will lose 4 per cent of their income, compared with 3 per cent for households without children and 1 per cent for pensioners.
The threshold at which the 40 per cent rate of income tax kicks in will fall from £37,400 to £35,001, affecting huge numbers who are currently basic rate taxpayers.
More...
* Austerity? It¿s a good name for a girl, says Tory grandee and House of commons Leader Sir George Young
* 'Abandoning deficit reduction plan would leave the country in turmoil within minutes', warns Chancellor
An increase of £1,000 in the amount people can earn tax-free, to £7,475, will help the less well-off, and Chancellor George Osborne is thought to be considering raising this by a further £500 in his March Budget.
But the IFS said the average household will be £200 a year worse off as a result of tax changes and benefit cuts.
That is before child benefit is withdrawn for higher-rate taxpayers from 2013.
Mr Osborne said if he turned back from the Government’s deficit reduction plan, the country would be in ‘financial turmoil’ at the hands of international markets in minutes.
‘I’m someone who would like to see lower taxes... but we’ve got to deal with our deficit,’ he said. ‘If you don’t, you cut taxes one year and have to put them up the next, and that is a false choice for the British people.
‘No politician likes cutting spending and increasing people’s taxes, but I was delivered a mess by the previous government and I am trying to clear
it up.’
The Chancellor again made clear there was no ‘Plan B’ for the economy, even if Britain tips into a double dip recession. His remarks came as shadow chancellor Ed Balls refused to accept his party had any responsibility for the unprecedented budget deficit.
Happy families...but for how long? Families with children at almost every point of the income scale will be harder hit than pensioners or workers without children, the Government report says
Happy families...but for how long? Families with children at almost every point of the income scale will be harder hit than pensioners or workers without children, the Government report says
Mr Balls also refused to say whether he would implement former Labour Chancellor Alistair Darling’s plan to start spending cuts in April. He said tax hikes and budget cuts were ‘irresponsible and dangerous’.
And he claimed that in his ‘heart of hearts’, Bank of England governor Mervyn King harboured serious concerns about the Coalition’s austerity measures, but was unable to voice them publicly.
Today’s IFS report concludes that around 750,000 people will start paying income tax of 40 per cent from April 5.
But around 500,000 people will be lifted out of income tax as a result of the increase in the personal allowance.
The main rate of National Insurance will also rise, from 11 per cent to 12 per cent, at the start of the new tax year.
The IFS said the reforms would hit higher income households the hardest.
The report concludes that the tax and benefit changes involve a net ‘takeaway’ of £5.4billion from households in 2011/12.
Stamp duty get out
James Browne, a senior research economist at the IFS, said: ‘Further reductions in household income are inevitable as Government policies aimed at helping to reduce borrowing from its post-Second World War high are introduced.’
Other measures being considered for the Budget are low-tax enterprise zones with generous business tax rates.
Hauliers hit by high fuel prices may get help from a VAT rebate. And tax dodgers who hide money offshore risk being fined twice what they owe.
Margaret Thatcher’s flagship job creation policies will be revived today as ministers pledge to ‘get Britain working again’.
Employment minister Chris Grayling will announce the first of six ‘enterprise clubs’ which will be run by businesses and offer the unemployed advice on setting up small firms.
He will also confirm details of an ‘enterprise allowance’ where those out of work can keep claiming Jobseeker’s Allowance for up to six months if they use the cash to set up a business.
Read more: http://www.dailymail.co.uk/news/art...amilies-children-the-brunt.html#ixzz1Ce82jynC
higher rate tax... and families with children will the the brunt
By James Chapman
Last updated at 12:52 AM on 31st January 2011
Stark warning: George Osborne warned some basic rate taxpayers will lose 73p in every extra pound they earn
Families with children will be hardest hit by the Government’s tax and benefit changes, a major report reveals today.
And at least 750,000 people will be dragged into paying the higher rate of income tax.
The report from the Institute for Fiscal Studies also says marginal tax rates – the amount lost in tax and withdrawn benefits as people earn more – will increase for more than 22million people from April.
Some basic rate taxpayers will lose 73p in every extra pound they earn as they pay more in tax and National Insurance and tax credits are withdrawn.
A small number of higher-rate taxpayers will lose 83p in every extra pound.
Families with children at almost every point of the income scale will be harder hit than pensioners or workers without children, the report says.
The top 10 per cent of earners with children – those on around £45,000 or more – will lose 4 per cent of their income, compared with 3 per cent for households without children and 1 per cent for pensioners.
The threshold at which the 40 per cent rate of income tax kicks in will fall from £37,400 to £35,001, affecting huge numbers who are currently basic rate taxpayers.
More...
* Austerity? It¿s a good name for a girl, says Tory grandee and House of commons Leader Sir George Young
* 'Abandoning deficit reduction plan would leave the country in turmoil within minutes', warns Chancellor
An increase of £1,000 in the amount people can earn tax-free, to £7,475, will help the less well-off, and Chancellor George Osborne is thought to be considering raising this by a further £500 in his March Budget.
But the IFS said the average household will be £200 a year worse off as a result of tax changes and benefit cuts.
That is before child benefit is withdrawn for higher-rate taxpayers from 2013.
Mr Osborne said if he turned back from the Government’s deficit reduction plan, the country would be in ‘financial turmoil’ at the hands of international markets in minutes.
‘I’m someone who would like to see lower taxes... but we’ve got to deal with our deficit,’ he said. ‘If you don’t, you cut taxes one year and have to put them up the next, and that is a false choice for the British people.
‘No politician likes cutting spending and increasing people’s taxes, but I was delivered a mess by the previous government and I am trying to clear
it up.’
The Chancellor again made clear there was no ‘Plan B’ for the economy, even if Britain tips into a double dip recession. His remarks came as shadow chancellor Ed Balls refused to accept his party had any responsibility for the unprecedented budget deficit.
Happy families...but for how long? Families with children at almost every point of the income scale will be harder hit than pensioners or workers without children, the Government report says
Happy families...but for how long? Families with children at almost every point of the income scale will be harder hit than pensioners or workers without children, the Government report says
Mr Balls also refused to say whether he would implement former Labour Chancellor Alistair Darling’s plan to start spending cuts in April. He said tax hikes and budget cuts were ‘irresponsible and dangerous’.
And he claimed that in his ‘heart of hearts’, Bank of England governor Mervyn King harboured serious concerns about the Coalition’s austerity measures, but was unable to voice them publicly.
Today’s IFS report concludes that around 750,000 people will start paying income tax of 40 per cent from April 5.
But around 500,000 people will be lifted out of income tax as a result of the increase in the personal allowance.
The main rate of National Insurance will also rise, from 11 per cent to 12 per cent, at the start of the new tax year.
The IFS said the reforms would hit higher income households the hardest.
The report concludes that the tax and benefit changes involve a net ‘takeaway’ of £5.4billion from households in 2011/12.
Stamp duty get out
James Browne, a senior research economist at the IFS, said: ‘Further reductions in household income are inevitable as Government policies aimed at helping to reduce borrowing from its post-Second World War high are introduced.’
Other measures being considered for the Budget are low-tax enterprise zones with generous business tax rates.
Hauliers hit by high fuel prices may get help from a VAT rebate. And tax dodgers who hide money offshore risk being fined twice what they owe.
Margaret Thatcher’s flagship job creation policies will be revived today as ministers pledge to ‘get Britain working again’.
Employment minister Chris Grayling will announce the first of six ‘enterprise clubs’ which will be run by businesses and offer the unemployed advice on setting up small firms.
He will also confirm details of an ‘enterprise allowance’ where those out of work can keep claiming Jobseeker’s Allowance for up to six months if they use the cash to set up a business.
Read more: http://www.dailymail.co.uk/news/art...amilies-children-the-brunt.html#ixzz1Ce82jynC
