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Friday
Jul232010

More Tax for Higher Earners Thanks to Budget

Just as the recent Budget has made things easier for lower earners as the personal allowance was raised by £1,000, so it simultaneously disappointed those who are earning a much higher income.

The higher rate of tax is currently payable on any earnings above the threshold of £43,875.  While the Chancellor was announcing various measures to try and tackle the huge amount of national debt, it was certainly the case that some aspects of the Budget were not announced as loudly as others.

I was not surprised by this, since unpopular measures are never made as clear as the more popular ones.  Thus we saw the media seize on the fact that the personal allowance was being increased, while news of the increase in tax for higher earners was not as well reported.

The threshold for the highest band of tax payable will now go down by £1,500.  This will mean it will be fixed at £42,375.  Since the highest tax band is set at 40%, we can see that those earning more than this level will be taxed far sooner than they would have been otherwise.

This will be understandably disappointing for those who fall into this bracket.  But we have some time at least before the measures fall into place.  According to the announcement the new levels will start as the 2011-2012 tax year gets underway.

It’s understandable for many people to react badly against the Budget, because it is always going to appeal to some more than others.  But surely the most important thing at the moment is to get the country back on its feet.  If you have any concerns about how the new Budget could affect you, contact us at St Matthew for advice now.

 



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