Many people probably don’t realise how high their marginal rate of tax is and therefore how little they gain from an increase in income. Many politicians don’t seem to know. Do you know? Leonard Beighton has explained how income tax, national insurance and benefit systems overlap and as a result many of the least well off households have in effect a 68% tax rate. For some their tax rate will be higher.
Read MoreFamilies will welcome the cut in the national insurance contribution (NIC) rate from 12% to 10 % from 6 January 2024: with income tax at 20% that will mean a combined rate of 30%. However for the substantial number of families who both pay tax and nic but are entitled to universal credit, the tax saving will be much smaller than the Chancellor said.
Read MoreThe tax burden is increasing for everyone but taxpayers with children are the worst affected. They have the lowest incomes yet bear a disproportionately high share of the income tax burden. The Treasury takes back from many of them almost 70% or more of any extra money they earn, a review of the taxation of families by Tax and the Family says.
Read MoreThe Office of National Statistics announced yesterday that in August the Consumer Prices Index rose by 6.7%. This means that prices have risen by 6.7% compared to the same month a year ago. Wages are said to have increased by 7.8%.
Read MoreDon Draper of Tax and the Family has said the report shows what a mess the tax and and benefit system is. It should be compulsory reading for all politicians and their advisers.
Read MorePolicy in Practice, an influential software and and analytics company, have published an important report confirming what Tax and the Family have been saying for years – that it is not only low income families who are affected by the interaction between income tax and universal credit. Their analysis shows that even households with incomes in excess of £100,000 could be paying income tax and getting universal credit and as a result have a high marginal rate and have a little incentive to earn more.
Read MoreA new report by the influential Centre For Policy Studies calls for fairness for families to be at the heart of the tax system.
Read MoreMargaret Thatcher blocked a key component of Nigel Lawson’s plan for independent taxation. How many people know this?
Read MoreLord Lawson of Blaby, arguably the most influential postwar Chancellor, has died at the age of 92. The tax system we have to day is part of his legacy. However, it is not the one he wanted. This was blocked by Margaret Thatcher.
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