Tuesday, 17 October 2017

Around 775,000 people pay more tax than millionaires - are you one of them?

Tens of thousands of people have been caught up 
in tweaks to the tax system (Matt Cardy/Getty Images)
Over three-quarters of a million people are paying more tax on every extra pound they earn than millionaires.

Thanks to successive tweaks, reviews, revisits and updates to the tax system, hundreds of thousands of ‘ordinary working families’ find themselves caught out by the taxman.

The key issue, says mutual insurer Royal London, is that there are numerous marginal tax rates, many of them linked to what benefits people receive.

Royal London says some 775,000 people are paying well over the 45% top tax rate because as their incomes rise they begin to lose tax, pension and child benefit allowances.

Under the current UK income tax system, the amount of tax paid on an extra pound is intended to rise steadily as incomes rise.

Those under £11,500 pay no tax, those up to £45,000 pay tax at 20p in the pound, those up to £150,000 pay 40p in the pound, and those on higher incomes – including millionaires – pay 45p in the pound in income tax for each extra pound that they earn.

By Mark Dorman.

Full story at Yahoo News.

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