If you think your income tax bill has gone up recently, you’re not alone! According to the latest forecast from HMRC, 4.1 million UK taxpayers are now paying income tax at the higher rate.
In the 2011-12 financial year, 3.57 million of us were paying tax at the 40% rate. That has now gone up to 3.8 million since the start of the new tax year. Furthermore, an extra 307,000 taxpayers are paying the 50p rate, which is set to fall to 45p in 2013-14.
14% of UK taxpayers now pay the higher rate of tax – up from 10% in 2002. Almost a million people have been brought into the higher bracket in the last three years alone.
Whilst the income tax personal allowance has been increasing each year, the government has been consistently reducing the threshold for the higher rate to catch more people. However, although more people now fall into the higher tax bracket, the total number of individuals subjected to UK income tax is set to drop by 0.4 million to 29.7 million, as workers on low pay benefit from the increased personal tax allowance.
Meanwhile, Scottish taxpayers could soon be paying income tax at a different rate to people in England and Wales. The Scotland Act, which received Royal Assent at the beginning of May, allows the Scottish Parliament to set its own income tax rate for taxpayers whose permanent residence is north of the border.