Posted: 22:35, 30 June 2022 | Updated: 00:34, 1 July 2022
Rishi Sunak faced mounting pressure to set a timetable for tax cuts last night as millions of middle-class families were hit by higher bills. A covert tax raid has led nearly two million more people to be dragged into higher income taxes since the last election. The total will skyrocket, with one in five taxpayers expected to pay the 40 or 45% rate soon. Last year, Chancellor Sunak froze income tax thresholds until 2026 – a move that has been criticized as a cut in real wages for millions of families already affected by rising cost of living. Rishi Sunak faced mounting pressure to set a timetable for tax cuts last night as millions of middle-class families were hit by higher bills. A covert tax raid has led nearly two million more people to be dragged into higher income taxes since the last election About 4.3 million people were paying the 40p higher or 45p extra income tax rate when Boris Johnson won the 2019 general election. This is now projected to reach a record 6.1 million this year – almost double the number since 2010. Experts warn that it could exceed seven million by 2024 – meaning one in five taxpayers will have higher rates, an increase of about 70 per cent in this Parliament, according to pension consulting firm LCP. It has sparked calls for Tory lawmakers to cut taxes as fears grow that the party will lose its reputation for low taxes. The point is, the starting point for higher tax rates has not kept pace with rising incomes. The five-year freeze on borders has exacerbated this trend, creating “fiscal resistance”. And with wages and pensions rising rapidly with inflation, things are likely to get worse. Some 4.3 million people paid the 40p higher or 45p extra income tax rate when Boris Johnson won the 2019 general election. It is now projected to rise to a record 6.1 million this year – almost double the number since 2010. LCP associate Sir Steve Webb, a former pension minister, said: “Paying higher taxes was intended for the richest, but that has changed. “People who would not consider themselves particularly rich can now easily face a tax rate of 40 percent.” Tory MP Mel Stride, chairman of the Communities Finance Committee, said the chancellor had only “limited” room for tax cuts until inflation eased, but added: “At that point I would expect him to make a serious move towards receiving the tax. I weigh down “. “We should raise the threshold for the highest percentage very high on the income scale instead of dragging more and more middle-income people into it,” said Tory MP Markus Fiss. Sarah Coles, senior financial analyst at Hargreaves Lansdown, said: “With the thresholds frozen by 2026, we will see a steady stream of taxpayers exceeding the thresholds and paying exorbitant tax levels.” He added: “Hot inflation and frozen tax cuts are going to drive income tax to an incredibly painful 25 251 billion – almost a third in three years – and it will get worse.” There were 31.5 million people who paid income tax in 2019/2020. This is expected to increase by 2.5 million to 34 million by 2022/2023, according to the HMRC. About 80 percent pay the basic tax rate of 20 percent. Those with the highest tax rate of 40% are projected to reach 5.5 million in the 2022/2023 tax year – a 44 percent increase over three years. The number of top 45 percent income tax payers is expected to increase by almost half to 629,000 over the same period. The tax-free personal allowance is £ 12,570. The highest rate of 40 percent is for salaries of £ 50,270 or more and the additional 45 percent for £ 150,000. The latest figures from the National Statistics Office show that the average wage increase was 6.8 per cent year-on-year. Thus, someone with 47 47,500 last year will now be in the highest tax range, according to AJ Bell calculations. Asked if the government would cut taxes by next year, Boris Johnson said: “Next month we have a tax cut of 30 330 on average for incoming National Insurance payers. It will be a significant reduction in taxes. “ However, Paul Johnson, of the Institute for Fiscal Studies, said it was a “fairy tale” to believe that the government could cut taxes because of pressure on its spending.
