From 2011, if Labour win the next election, earnings above £150,000 will be taxed at a new higher rate of 45 per cent. The new higher rate of tax – the first income tax increase in decades – will raise £670m a year.
Trivial….the politics of envy, no more. At current rates of spending this is something like 0.1% (yes, one tenth of one percent) of the total tax take. Meat for the success hating classes, nothing else.
Mr Darling\’s tax increases will begin in 2010 – before the expected date of the next election – with changes to the tax-free personal allowance. At the moment, no taxpayer has to pay income tax on the first £6,035 of their earnings – a tax saving worth £1,207 per person.
However, from 2010, those earning more than £100,000 will lose half their personal allowance – adding more than £600 to their annual tax bill. Those earning more than £140,000 will not get any tax-free allowance.
This creates a couple of oddities in the marginal rate that (some) people face. But not important ones I think. Dependent upon the details those earning £139,999 and getting a £1 pay rise will see a reduction in take home income. But at that level I don\’t think that anyone does get a £1 pay rise, so I doubt that it\’s of any importance.