Hundreds of thousands pay top rate of up to 70%
A report by Royal London reveals 775,000 people are paying more tax on each extra pound that they earn than someone whose income runs into millions. It found that people on higher bands lose up to 70p on each extra pound they earn because of increased NI contributions, loss of child benefit and reduced allowances. Sir Steve Webb, head of policy at Royal London, is urging Philip Hammond to use next month"s Budget to address the anomaly. “Most people would agree that as people earn more they should pay a higher rate of tax. A series of complex changes that have been bolted on to the tax system over recent years means this is no longer true,” he said. Elsewhere, the Sunday Telegraph’s Richard Evans says the figures prove the need for a broad simplification of the tax system, while the Mail on Sunday’s Jeff Prestridge says a reluctance among politicians to tinker with income tax rates has created pockets of unfairness in the system. Meanwhile, the Sunday Times reports that Mr Hammond is proposing a “revolutionary” Budget next month that will make “a big offer to the nation” on housing, tax and borrowing. Policies under consideration are said to include lower tax rates for young people, which could be paid for by slashing pension tax relief for better off workers.
Source: The Sunday Times (15/10/2017)