6/24/2023 0 Comments Squeed towards the averageThe “£60k earner” refers to someone earning £60,000 in 2021/22, in cash terms, whose earnings then rise in line with forecast average earnings growth in subsequent years.Īverage earnings for 20 were drawn from the ONS’s Annual Survey of Hours and Earnings. In the Library’s analysis, the “median earner” refers to a person earning the median wage for a full-time employee in April 2021 and April 2022, which then increases by average earnings. These figures were used as the Bank of England's inflation target is 2% and the earnings growth figure of 2.7% is taken from the final year of the OBR’s forecast (2027-28). This means that all the relevant thresholds/ allowances grow by 2% per year while earnings grow by 2.7% per year. In all years after 2027/28 (for which we do not have OBR forecasts), the Library assumes that CPI is 2% and earnings grow at 2.7% each year. Under the counterfactual policy, all income tax thresholds/ allowances are uprated in each year by CPI inflation. From April 2028 they revert to the default policy, which is annual uprating by CPI inflation. Under current government policy, the income tax personal allowance and higher rate threshold are frozen until April 2028. The House of Commons Library calculated the income tax hit by comparing current Government policy with before the March 2021 Budget: This could have all been avoided if the Conservative party hadn’t crashed the economy and sent interest rates spiralling with their botched budget.” “It is deeply shameful that the Conservative government has chosen to slash taxes for the big banks whilst hiking them for the public. Why should the hardworking middle be forced to pick up the bill for the Conservative party crashing the economy? Families are watching aghast as their paycheques fall while mortgage costs soar. “Britain’s squeezed middle is facing a lost decade of unfair tax hikes and soaring inflation. While families are seeing their taxes hiked, the government is giving £18 billion in tax cuts to the banks over the next five years, through a reduction in the bank levy and surcharge. This is equivalent to six weeks of unpaid work (42 days). The figures also show that someone on an average salary of around £33,000 will pay an extra £4,040 in income tax due to the freezing of the personal allowance. It means their income tax bill will be almost a fifth higher (18%) than it would have been if the thresholds had not been frozen. In total, the squeezed middle earner would pay over £134,000 in income tax over the next decade. It looks at the additional tax paid compared to if income tax thresholds had increased in line with inflation each year, as they would do if the freeze wasn’t in place. The research is based on someone earning £60,000 in 2021/22, whose earnings then rise in line with average earnings growth in subsequent years. The Liberal Democrats accused the Conservatives of betraying Britain’s hard-working middle, warning that families are facing a “lost decade” of tax hikes and soaring inflation. This is equivalent to nearly four months of work going unpaid, or 111 days. The House of Commons Library analysis shows that someone on a salary of £60,000 will pay an extra £20,440 in income tax over the next ten years due to Jeremy Hunt’s freezing of income tax thresholds. Squeezed middle earners are facing a staggering £20,000 stealth tax hike over the next decade, new research commissioned by the Liberal Democrats has revealed.
0 Comments
Leave a Reply. |