Pre-Budget report: Why the basic rate of income tax will be 31.5pc from April, 2011 not 20pc
From April next year the upper earnings level from which NICs are deducted will rise to nearly £44,000 and, from April 2011, an extra half a percentage point NICs will be deducted from employers, employees and the self-employed.
"This is a double whammy," said Mike Warburton, of accountants Grant Thornton, "and the effect will be to take an extra £548 a year away from someone earning £44,000 – that's an increase of 14pc in this tax and a hidden sting in the tail.
Bob Rothenberg, of accountants Blick Rothenberg, added: "People don't think of NICs as being income tax but, as the Chancellor aligns these taxes more closely together, it does raise the question of why he does not just call them what they are; income tax.
"But that would mean admitting that the basic rate of income tax is not 20pc but 31.5pc from April, 2011."
High earners face even bigger increases. People earning more than £100,000 a year will contribute an extra £830m in tax during 2010 or an average of more than £1,270 extra tax each. According to the Treasury, there are 650,000 people in this group; rather more than the entire population of Glasgow.
By the following year, from April 2011, this group will pay more than £1.3bn extra tax as a result of personal allowances – or slices of income everyone is allowed to receive before paying tax – being phased out to the point where they disappear for those earning £140,000 or more.
Enjoy. I'd hate to see what tax increases look like if these are Labour's tax "cuts".
From April next year the upper earnings level from which NICs are deducted will rise to nearly £44,000 and, from April 2011, an extra half a percentage point NICs will be deducted from employers, employees and the self-employed.
"This is a double whammy," said Mike Warburton, of accountants Grant Thornton, "and the effect will be to take an extra £548 a year away from someone earning £44,000 – that's an increase of 14pc in this tax and a hidden sting in the tail.
Bob Rothenberg, of accountants Blick Rothenberg, added: "People don't think of NICs as being income tax but, as the Chancellor aligns these taxes more closely together, it does raise the question of why he does not just call them what they are; income tax.
"But that would mean admitting that the basic rate of income tax is not 20pc but 31.5pc from April, 2011."
High earners face even bigger increases. People earning more than £100,000 a year will contribute an extra £830m in tax during 2010 or an average of more than £1,270 extra tax each. According to the Treasury, there are 650,000 people in this group; rather more than the entire population of Glasgow.
By the following year, from April 2011, this group will pay more than £1.3bn extra tax as a result of personal allowances – or slices of income everyone is allowed to receive before paying tax – being phased out to the point where they disappear for those earning £140,000 or more.
Enjoy. I'd hate to see what tax increases look like if these are Labour's tax "cuts".
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