BlogOne million more people pay higher tax' under Coalition

One million more people pay higher tax' under Coalition

A million more people are being forced to pay the upper 40p income tax rate to fund the Government's ongoing plans to help the lowest paid workers, according to experts.

The Coalition says it has taken nearly 2 million people out of the tax system by raising the tax-free personal allowance and it reportedly plans to increase the threshold again from £10,000 to £10,500 in next week's Budget.

It is expected that Chancellor George Osborne will pay for the rise by making more people eligible for the 40p rate as he has done in the past, sources told The Times.

The Institute for Fiscal Studies has calculated the effect of a below-inflation 1 per cent rise in the 40p threshold, which would take it to £42,285 next year — £4,910 lower than it would have been under the plans left by the last Labour government.

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