Chartered Certified Accountants
Chartered Tax Advisers
Registered Auditors

news

One in five workers will be higher rate taxpayers by 2027, says IFS

The number of people paying income tax at 40% or above will reach 7.8 million by 2027/28, according to research published by the Institute for Fiscal Studies (IFS).

This represents one in five taxpayers and one in seven of the adult population – a near-quadrupling of the share of adults paying higher rates since the early 1990s, the IFS said.

It stated that the six-year freeze to income tax allowances and thresholds which started in April last year is set to become the single biggest tax-raising measure since Geoffrey Howe doubled VAT in 1979.

Isaac Delestre, Research Economist at the IFS, said:

‘For income tax, the story of the last 30 years has been one of higher-rate tax going from being something reserved for only the very richest to something that a much larger proportion of adults can expect to encounter.

‘The freeze to thresholds is supercharging that process, pulling an additional 2.5 million more people into paying rates of 40% or more by 2027/28. Whether or not the scope of these higher rates should be expanded is a political choice as much as an economic one, but achieving it with a freeze leaves the income tax system hostage to the vagaries of inflation – the higher inflation turns out to be, the bigger impact the freeze will have.’

Internet link: IFS

Next post

    Crozier jones Newsletter

    Subscribe to our newsletter to receive the latest industry and company news