Tax Rebates & Refunds

Income Tax to rise…or not?

March 16, 2010
Posted in Income Tax — Written by The Tax Repayment Agency

Chancellor Alistair Darling might raise Income Tax on March 24th in his pre-election BudgetOpinion is divided over whether or not Chancellor Alistair Darling will raise Income Tax in the last Budget before the General Election.

There is concern about the huge gap between the 50% tax rate for those earning over £150,000 and the current 18% Capital Gains Tax rate, which is causing some to convert income into capital, thus avoiding the higher rate.

More importantly though, the Government has to try to reduce the country’s deficit and some are predicting a rise in Income Tax is one way Darling might go about it.

Prime Minister Gordon Brown has already said he wants to avoid hitting low and middle earners in the pocket, however:

“Fairness will be at the heart of the measures we take to reduce the deficit. Unlike the policies of the 1980s and 1990s – where taxes for the wealthy people in society came down, as the burden on people on middle and modest income went up – we will not make those on modest and middle incomes take the greatest strain.”

But a rise in the basic rate of tax from 20% to 22% or a rise from 40% to 45% for those on more than £43,875 have been mooted as possible moves in the March 24th Budget.

Should a direct rise in Income Tax rates not happen it seems that there will be at least a 1% rise in National Insurance contributions and a possible freeze on personal allowances for a few years.

Remember, if you think you may have paid more income tax than you should have at any point in the last six years, you could be entitled to a tax refund.

It costs nothing to find out. Download a claim form here or contact us and we’ll send one out to you.

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