Press Releases

24 March 2011

Chancellor’s £2bn sleight of hand - Tax switch to CPI

The Government expects to raise £2.05bn in the next five years, and over £1bn each year by 2015/16 by indexing direct taxes to CPI rather than RPI.

The following comments can all be attributed to Pauline Manning, Tax Partner at Wilkins Kennedy.

“The Chancellor’s switch to the CPI index for direct taxes is a sleight of hand to boost the tax take.  The change means more workers will be caught in higher tax brackets because tax thresholds will increase more slowly than peoples’ salaries.”

“This is a stealth tax that will see a dramatic rise in the number of people paying higher rates of income tax.”

“The Government should link increases in the higher rate income tax threshold to pay rises so that the proportion of taxpayers actually in the top band remains static over time.”

More taxpayers will creep into top tax bracket

“The Chancellor failed to name a date when he would abolish the 50p top rate of tax, which means it could be around for a number of years.  That means that many more taxpayers will be dragged into the top tax rate as their salary increases outpace the increase to the top tax threshold.”

“If the 50p tax rate is not abolished soon, a growing number of taxpayers on relatively modest incomes will get caught by a tax that was meant to target the rich.”

ENDS

Issued by Mattison Public Relations on behalf of Wilkins Kennedy