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 Armstrong & Co Solicitors

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Budget 2021/22
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Posts: 460
Joined: Feb 2016
Post: #1
03-03-2021 11:51 PM

I'm not sure if this is allowed, but here goes.
(Admin, if not then happy for you to delete this post)

Taken from the BBC website

5. Pay rises may bring a tax shock

"Although income tax is not rising, the tax bill that people may face in future years could go up.

At present, people start paying 20% income tax when they earn £12,500 a year. The starting point for paying the higher 40% rate is £50,000.

These thresholds will go up to £12,570 and £50,270 in April, but will then be frozen for five years.

With these thresholds maintained at the same level until April 2026, many people receiving a pay rise may find themselves in a new tax bracket and having to pay more."

Effectively, by freezing the threshold of how much you can earn before tax is due to HMRC, it means more people will over the period of five years, that the freeze is supposed to last, more people will fall into the the lowest 20% tax band, either from wage increases or from other incomes, i.e. pensions which will result in more people having to pay tax at the basic rate.

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