March 1st, 2012

Coming soon – a tax rate of 2,265%?

On the 6 April 2012 some UK tax payers could face a marginal rate of tax that makes the highest 50% tax rate look generous.

Under current proposals a household in which one earner is a higher rate tax payer will lose any entitlement to child allowance. In practice this would mean that £10 of earnings per annum in the higher tax band would attract income tax of £4 and cause £2,261 of benefits to be lost (for a family with 3 children). This adds up to an effective tax rate of 2,265%.

The Budget on 21 March 2012 will hopefully make the policy clearer but there seems to be little indication that the Chancellor has any plans to pull the proposal. Watch this space.

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John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys keeping fit and is a Liverpool FC season ticket holder.

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