ChemistryEquipment: 750,000 'to pay higher tax rate'

Monday, January 31, 2011

750,000 'to pay higher tax rate'

The IFS estimates the average household will be £200 worse off

Three-quarters of a million more people are set to become higher-rate taxpayers in April, according to a leading economic research body.

About 750,000 people will start paying the higher 40% income tax rate on their earnings from 5 April, says the Institute for Fiscal Studies (IFS).

The threshold at which the higher rate kicks in is to be £35,001, down from £37,400 this financial year.

Chancellor George Osborne told the BBC he had to make hard economic decisions.

Speaking to the Politics Show on Sunday Mr Osborne said no politician liked cutting spending and increasing taxes, but he was trying to clear up the "mess" Labour had left.

He added: "I feel every day a huge responsibility to get these decisions right for Britain."

The IFS estimates the average household will be £200 a year worse off as a result of tax increases and benefit cuts.

From the start of the next tax year, the government is also increasing the main rate at which National Insurance is charged.

However, the IFS also says half a million people will no longer pay income tax, following the £1,000 increase in the amount people can earn tax-free being raised to £7,475.

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