"Rachel Reeves has given a strong indication she will increase income tax in the Autumn Budget. If the basic rate of income tax was increased by 2% a doctor who is on a £60k salary, who currently pays £11,432 in tax would pay an additional £754 per year. Someone on a minimum wage salary of £22,250, who pays £1,936 in tax, would pay £193.6 more tax per year."
"However, if there is an increase in income tax rates, there could be a corresponding reduction in employee National Insurance Contribution (NIC) rates. This would mean there is no overall change in people's tax position which could cushion the political blow of breaking the manifesto pledge. However, pensioners and those with letting or investment income would lose out as they can't benefit from a NIC reduction."
"Although this would break Labour's election promise of not increasing taxes on 'working people', a 1% increase in income tax could generate around £7-8bn extra tax revenue, and a 2% increase could generate £11-12bn. Which would help fill the fiscal black hole, and if spent well in the right areas, could pay off in the long term fiscally and in the public eye."
Rachel Reeves has given a strong indication she will increase income tax in the Autumn Budget. Blick Rothenberg computed that a 2% increase would cost a doctor on a £60k salary an extra £754 annually and someone on a £22,250 minimum-wage salary about £193.60 more per year. A 1% rise could generate around £7-8bn while a 2% rise could generate £11-12bn in extra revenue. An offsetting reduction in employee National Insurance Contributions could leave overall tax positions unchanged for workers but would not benefit pensioners or those with letting or investment income. The government will present Budget plans on 26 November.
Read at London Business News | Londonlovesbusiness.com
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