Frozen tax thresholds pull more into tax traps

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This 795-word blog post looks at the impact of frozen tax thresholds for income tax, pension annual allowances, inheritance tax, and child benefit, and the impact these have on taxpayers with rising earnings. Includes commentary from Stuart Adam, a Senior Research Economist at IFS, and Paul Johnson, IFS Director. Written on 5th April 2019.

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Description

Article preview: With the start of a new tax year, attention naturally turns to making the most of allowances and minimising tax bills where possible. For higher earners, keeping the total tax paid as low as possible can be hard work. An increasing number of people are now subject to the highest rate of income tax at 45% on some of their earnings, with the loss of personal tax allowance also suffered. In the year before the top income tax threshold of £150,000 was announced in 2008, around 319,000 taxpayers in the UK had incomes above that level.