|
|
Post by northwestman on Nov 11, 2022 13:34:38 GMT 1
I've been spitting feathers about this 'stealth tax' for absolutely ages, and have already e-mailed my M.P. Helen Morgan in protest.
The Chancellor, Jeremy Hunt, is poised to impose a deep freeze on tax thresholds in his Budget next week.
It means the point at which earners become liable to pay income tax, higher-rate tax and additional-rate tax will all remain the same for at least another six years.
The inheritance tax threshold and cap on lifetime tax-free pension savings are also likely to remain as is for the foreseeable future.
It’s not technically an increase or a cut, but it is extremely effective in bringing in billions of pounds for the Treasury without taxpayers noticing.
Tax cuts and rises make a splash because the public can easily decipher what it means for them. The impact of a freeze, however, is not so clear. Until now that is.
The “fiscal drag” phenomenon allows the Treasury to collect more of our cash as inflation and rising pay push more taxpayers across thresholds and into higher tax brackets. The impact is well understood among economists and it is clear as day on the spreadsheets of the Treasury’s penny-pinching civil servants.
Yet for taxpayers the full impact is not immediately apparent; the damage is done over years rather than days.
When, as chancellor, Rishi Sunak announced his freeze on an array of tax thresholds last year, it was a sneaky move that he knew would bring in some extra cash.
But inflation was around 1pc. The Office for Budget Responsibility estimated at the time that the freeze on income tax thresholds would create 1.3 million new income tax payers and another million higher-rate ones. But then inflation took off.
By the end of the 2021 it had breached 5pc and it rose above 10pc this year. Economists now expect it to remain high for at least another year.
As a result, the freeze on tax thresholds is to make the Treasury much more than Mr Sunak originally expected. And yet Mr Hunt is potentially preparing to keep the thresholds frozen for a further two years.
He does so, unlike his predecessor, in the knowledge that inflation will line the pockets of the Treasury at the taxpayer’s expense on an unprecedented scale.
What was once a cheeky stealth tax grab is now a sinister exploitation of economics.
New estimates from the Centre for Economics & Business Research, a think tank, show that, thanks to rocketing inflation, the original 2021 freeze would create four million extra basic-rate taxpayers and an additional 2.9 million higher-rate taxpayers.
If Mr Hunt extends the freeze by another two years there will be a total of 5.8 million extra people who pay income tax and a total of 4.2 million who pay the 40pc higher rate.
Two in three pensioners could also be paying income tax under the Tories if the state pension triple lock is maintained. In ordinary times a freeze is a relatively painless way to raise money. But with inflation so high, it is particularly pernicious.
Daily Telegraph.
|
|
rob62
Midland League Division Two
Posts: 210
|
Post by rob62 on Nov 11, 2022 14:44:48 GMT 1
I agree that freezing the thresholds is a sneaky stealth tax.
However to adequately fund public services the tax take has to increase.
Im in favour of freezing the higher thresholds,but lifting the 20% threshold to help those on modest salaries keep more of there salaries
|
|
|
|
Post by Valerioch on Nov 11, 2022 18:03:52 GMT 1
Another policy that will see the Tories wave bye bye to my vote at the next Election
I think the whole system needs reform, something like a 10%/20%/30%/40%/50% tax bands going up in various increments of pay
By doing this you can help the lowest paid, also help the middle earners who are getting ever more squeezed, and increase tax on the richest.
But no, lets freeze bands and in doing so, punish those worst off
|
|
|
|
Post by zenfootball2 on Nov 11, 2022 18:22:27 GMT 1
not a suprise
|
|
|
|
Post by zenfootball2 on Nov 11, 2022 18:23:10 GMT 1
we are all going to be paying for conservatives incompetence for a very long time.
|
|
rob62
Midland League Division Two
Posts: 210
|
Post by rob62 on Nov 11, 2022 21:01:08 GMT 1
The country is broken without the funds to even have a decent ambulance,GP or social care system.
Not to mention inadequate policing and crumblin infastructure
As a conseuence of Brexit, Covid, Energy Prices and Liz Truss the finances are in a dire state.
Taxes will have to go up to fix the issue, the only debate is who has to bear the extra burden
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Nov 11, 2022 21:35:19 GMT 1
I’d be interested in knowing Helen Morgan’s response if you get one.
|
|
|
|
Post by northwestman on Nov 12, 2022 10:23:49 GMT 1
I’d be interested in knowing Helen Morgan’s response if you get one. I did in fact get a very prompt response from Helen Morgan. Here's some of her reply: Thank you for writing to me regarding the recent fiscal event and the the Government’s failure to unfreeze personal tax allowances. I agree with you that the personal allowance freeze is a stealth tax on working families. Many families are facing a cost-of-living crisis. Inflation is mostly driven by spiraling energy bills and fuel prices; and also global supply chain issues. Food prices are also going up. Unfortunately, the Government’s actions and broken promises are making it harder for working families to cope with rising prices – plunging them in a cost-of-living crisis: The Universal Credit cut leaves the poorest with a reduced income. The suspension of the triple lock has deprived pensioners of millions of pounds and is another broken manifesto promise. Also, the inflation rate the Government used to up-rate pensions doesn’t reflect the full extent of rising prices, meaning that much of this raise risks being eaten away by inflation. I will share your concerns with the Treasury and will ensure that their response will be shared with you |
|
|
|
Post by northwestman on Nov 12, 2022 20:12:13 GMT 1
www.dailymail.co.uk/debate/article-11418701/ANDREW-NEIL-Rishi-Sunak-Jeremy-Hunt-CLOBBER-middle-classes-never-before.htmlThe biggest stealth tax grab in the nation’s history is in prospect. The groundwork has already been laid. When chancellor, Sunak quietly froze every income tax threshold until 2026 instead of increasing them in line with inflation, which is the honest and fair thing to do. It was a massive hidden tax increase. By a process known as ‘fiscal drag’, which is especially brutal when (as now) inflation is high, many low-paid workers are dragged into the basic 20 per cent income tax bracket for the first time. Millions of middle-ranking earners find themselves moving to a marginal rate of 40 per cent — a bracket originally devised only for the highest earners — while hundreds of thousands more on big, but not millionaire salaries will be catapulted into the 45p bracket. Hunt is expected to extend the frozen thresholds for another two years. If that happens, the Institute of Fiscal Studies calculates that by 2028 fiscal drag would bring in £35 billion a year more in income tax revenue, which means this stealth tax will be doing most of the heavy lifting when it comes to filling in the £50 billion-plus fiscal black hole facing the Government. It used to be the law of the land that income tax thresholds had to rise in line with inflation. But that measure proved inconvenient for money-grabbing governments. So it was quietly junked. The cynical political calculation is that you won’t notice. That £35 billion is equivalent to a 6p rise on the basic rate of income tax. But Sunak-Hunt realise you’d certainly notice a rise in the basic rate from 20 per cent to 26 per cent, even if that would be the more open and honest way of raising extra revenue. Freezing thresholds means they get the same amount of revenue without having to raise tax rates. It’s underhand, it’s sneaky — and it works. Tory and Labour chancellors have repeatedly resorted to this form of stealth tax over the past 30 years without provoking any kind of taxpayer backlash. The only difference is that Sunak-Hunt are now doing it on a grand scale.
|
|
|
|
Post by northwestman on Nov 14, 2022 12:36:58 GMT 1
The tax-free allowance surged from just under £6,500 in 2009-10 to £10,600 by 2015-16 and £12,570 last year. The rising income tax allowance provided a boost to all workers but particularly those on lower incomes. The policy helped boost living standards by letting people keep more of their earnings.
We can forget this for the next 6 years it would seem.
|
|
|
|
Post by northwestman on Nov 15, 2022 13:03:23 GMT 1
The Chancellor is said to be looking at freezing income tax thresholds and allowances beyond the next election to save £6bn.
When Mr Sunak was Chancellor, he introduced a four-year freeze on tax thresholds in his 2022 Spring Statement in a bid to make £8bn of savings. This figure is now estimated to be more than three times this because of soaring inflation.
The tax-free personal allowance was frozen at £12,570, the higher rate (when workers start paying 40 per cent tax) was frozen at £50,270 and the upper earnings limit (when 45 per cent is paid) was frozen at £150,000. This was put in place until 2025-26.
Mr Hunt is now looking at extending the threshold freezes for a further two years, until 2027-28. The move would mean an extra three million workers will be dragged into higher income tax bands and would save the Treasury £6bn a year.
Torsten Bell of the Resolution Foundation told the Financial Times “people may not have noticed”, but the freezes will be “the biggest tax rises of all”.
The threshold for the higher rate of tax could also be reduced from £150,000 to £125,000. This would be a particularly bold move as Liz Truss’s mini-Budget originally scrapped this tax bracket.
But such a move would have a minimal impact on annual receipts, as revenues from the 45p rate are currently about £2bn a year and any changes are likely to raise only hundreds of millions of pounds.
The i.
|
|
|
|
Post by staffordshrew on Nov 15, 2022 13:09:42 GMT 1
Doesn't sound like a very smart idea from the Tories - extending past he next election means that their "offer" at the election is damaged.
|
|
|
|
Post by northwestman on Nov 15, 2022 16:58:48 GMT 1
Doesn't sound like a very smart idea from the Tories - extending past he next election means that their "offer" at the election is damaged. They are banking on the fact that a reasonably high % of the population won't realise the effects of this stealth tax. Regrettably, I fear they are right. |
|
|
|
Post by MartinB on Nov 15, 2022 17:35:41 GMT 1
The one I can't believe never gets commented on is when the Government claim isn't it wonderful so many people don't pay National Insurance anymore. What most people don't realise is this long term will save the Government millions of pounds as it means people won't qualify for the State Pension and have to rely on means tested benefit instead if they qualify.
|
|
|
|
Post by sheltonsalopian on Nov 15, 2022 17:50:11 GMT 1
The one I can't believe never gets commented on is when the Government claim isn't it wonderful so many people don't pay National Insurance anymore. What most people don't realise is this long term will save the Government millions of pounds as it means people won't qualify for the State Pension and have to rely on means tested benefit instead if they qualify. I don't disagree. As someone in their late twenties I've long given up on the idea of having a state pension when I get old enough to retire. |
|
|
|
Post by martinshrew on Nov 15, 2022 18:11:17 GMT 1
The one I can't believe never gets commented on is when the Government claim isn't it wonderful so many people don't pay National Insurance anymore. What most people don't realise is this long term will save the Government millions of pounds as it means people won't qualify for the State Pension and have to rely on means tested benefit instead if they qualify. I can't see the state pension being around in 20+ years to be honest. Absolutely no faith in it being a thing by the time I retire and all plans in place to thrive without it; if it comes then bonus. |
|
|
|
Post by northwestman on Nov 17, 2022 19:32:14 GMT 1
Inflation was harmless at around 1pc when Rishi Sunak first introduced the widespread freeze on tax bands and allowances in March 2021. But now that inflation is running at 11.1pc, Hunt’s two-year extension of the freeze is deeply cynical.
The figures make for grim reading.
The stealth tax grab will double the number of higher rate taxpayers to eight million within six years and mean a total of 11 million earners will be paying a greater rate of income tax than they do now.
Those in their 30s and 40s have been dealt the worst hand. Those trying to raise a family and build up a savings war chest now face punishing taxes for earning more and accumulating wealth.
Britain’s pay packets need to rise to keep pace with rising prices, but no-one wants to give more to the tax man. Hunt wants to kill off inflation, but his Autumn Statement risks taking aspiration down with it.
Daily Telegraph.
|
|
|
|
Post by northwestman on Dec 27, 2022 19:58:46 GMT 1
www.dailymail.co.uk/news/article-11576303/Middle-class-families-40-000-worse-decade-stealth-tax-research-shows.htmlIn the autumn statement the Chancellor announced he would freeze income tax thresholds until 2028 at the earliest. This means that thousands more families will end up paying increased amounts of tax, while earnings fail to keep pace with inflation. The Office for Budget Responsibility previously estimated 3.2 million people will be dragged into paying the 20 per cent basic rate of income tax due to the freezing of the personal allowance at £12,571. An estimated 2.6 million people are predicted to be pulled into paying the 40 per cent higher rate, which has a threshold of £50,271.
|
|
|
|
Post by northwestman on Dec 28, 2022 12:27:24 GMT 1
About 50,000 middle-class families will be hit with an effective tax rate of at least 80pc and as high as 96pc next year, new analysis has found.
Some families where one parent earns between £50,270 to £60,000 are paying the highest marginal tax rates in the country, according to the Resolution Foundation, a think tank.
The number of families paying these “unfair” tax rates – which affect those whose child benefit and Universal Credit payments are withdrawn once they earn above this threshold – will nearly double to 90,000 by the end of this decade, the report predicted.
This is because of the Government’s decision to freeze the income thresholds at which child benefit is withdrawn, which will drag more families into this band as their wages rise.
These high "marginal" rates – which only apply to portions of your income – are the result of successive governments tweaking the tax system and clawing back benefits that their predecessors had introduced.
Daily Telegraph.
|
|
|
|
Post by northwestman on Aug 10, 2023 9:42:58 GMT 1
Office for Budget Responsibility: "Our latest estimate is that the impact of frozen or reduced personal tax thresholds will increase receipts by a combined £29.3 billion a year (1.0 per cent of GDP) in 2027-28, as shown in Table A. Based on HMRC ready reckoners, this would be equivalent to a 4p increase in the basic rate of income tax. It is dominated by the yield from freezing the Personal Allowance and the Higher Rate Thresholds". "As nominal earnings grow, these measures bring more people into income tax and NICs, and pull more taxpayers into higher and additional rates than would have occurred had the thresholds continued to rise with CPI inflation (i.e. there would be fewer taxpayers subject to each marginal tax rate in the counterfactual, assuming the same level of earnings growth). Based on our latest forecasts for earnings growth and CPI inflation, these measures are expected to generate 3.2 million (9 per cent more) new taxpayers, 2.1 million (47 per cent more) new higher-rate taxpayers, and 0.35 million (47 per cent more) additional-rate taxpayers by the end of the forecast than would have been had the thresholds continued to be uprated with inflation". obr.uk/box/the-impact-of-frozen-or-reduced-personal-tax-thresholds/#:~:text=At%20March%20Budget%202021%2C%20then |
|
rob62
Midland League Division Two
Posts: 210
|
Post by rob62 on Aug 10, 2023 19:55:03 GMT 1
Truly terrible stealth tax that hits the poorest the most.
It was the Lib Dems in the coalition government that pushed to raise the threshold to over 12 grand. It has barely increased since, dragging those on low wages into the hands of the taxman.
With the current high rate of inflation the starting point for paying tax neefs to be raised significantly
Maybe the shareholders of the oil, gas and water companies could pay abit more
|
|
|
|
Post by northwestman on Aug 11, 2023 10:06:18 GMT 1
Truly terrible stealth tax that hits the poorest the most. It was the Lib Dems in the coalition government that pushed to raise the threshold to over 12 grand. It has barely increased since, dragging those on low wages into the hands of the taxman. With the current high rate of inflation the starting point for paying tax neefs to be raised significantly Maybe the shareholders of the oil, gas and water companies could pay abit more It won't be too long before even the State Pension is taxed, as this stealth tax is in place until 2028. |
|
|
|
Post by staffordshrew on Aug 11, 2023 11:32:12 GMT 1
The current fairly high levels of wage settlements put more people into paying tax at all and more people into moving into a higher rate band which enhances the effectiveness of this sneaky stealth tax.
Got to give them full marks for sneakyness, but that's not what I want from a government during high levels of inflation where more people are feeling the pinch and their real value earnings are falling. Even their own backbenchers are protesting there needs to be more help for hard pressed hard working people to help combat the cost of living crisis.
|
|
|
|
Post by Worthingshrew on Aug 13, 2023 20:54:53 GMT 1
Truly terrible stealth tax that hits the poorest the most. It was the Lib Dems in the coalition government that pushed to raise the threshold to over 12 grand. It has barely increased since, dragging those on low wages into the hands of the taxman. With the current high rate of inflation the starting point for paying tax neefs to be raised significantly Maybe the shareholders of the oil, gas and water companies could pay abit more It won't be too long before even the State Pension is taxed, as this stealth tax is in place until 2028. The state pension is taxable already, but I take what you mean about the level being above the threshold if things continue as they are. |
|
|
|
Post by martinshrew on Aug 14, 2023 9:49:15 GMT 1
The current fairly high levels of wage settlements put more people into paying tax at all and more people into moving into a higher rate band which enhances the effectiveness of this sneaky stealth tax. Got to give them full marks for sneakyness, but that's not what I want from a government during high levels of inflation where more people are feeling the pinch and their real value earnings are falling. Even their own backbenchers are protesting there needs to be more help for hard pressed hard working people to help combat the cost of living crisis. Is it that sneaky? I think by now if you don't realise what's happening, you're clueless. I'm not saying it's right, taxation is a complete mess for me, but to say it's sneaky is pushing it for me, it's glaringly obvious. I'd reset the tax brackets to the below if it were me: 20% - £15,000 40% - £60,000 45% - £125,000 50% - £250,000 I'm happy to pay more tax, but it has to be a top down exercise. Once you've got Apple, Amazon, Starbucks paying their fair share, get the multi-millionaires paying theirs and I'll happily pay another couple of pence in the pound. |
|
|
|
Post by SeanBroseley on Aug 14, 2023 11:45:16 GMT 1
There's no point in talking about one tax in isolation. The present government has done something to erode differentials in between different income streams and between income and capital gains. It should go further. In particular, national insurance is discriminatory against people who receive income through the work they do. It affects their net pay (obviously) and their gross pay (because employers pay NICs too) and unlike employers NICs being set against profits for corporation tax, employee NICs cannot be offset against their income tax liability.
|
|
|
|
Post by northwestman on Nov 17, 2023 20:42:30 GMT 1
www.theguardian.com/uk-news/2023/nov/17/jeremy-hunt-cutting-tax-stealth-raid-inheritance-tax-autumn-statementJeremy Hunt has been warned against using next week’s autumn statement to announce pre-election tax cuts for the wealthy while overseeing a multibillion-pound stealth raid on the incomes of 36 million workers. Cutting inheritance tax – which is paid by fewer than 4% of all estates, affecting largely the richest in society – would, however, come with the government on track to raise a “gargantuan” £40bn from freezing income tax thresholds. Adam Corlett, the principal economist at the Resolution Foundation, said the government’s six-year freeze in income tax thresholds had “turned from an £8bn ‘stealth’ tax to a gargantuan £40bn tax rise” because of higher inflation. “Any pre-election tax cuts – such as cutting inheritance tax for a small number of wealthy estates – would effectively be funded by higher taxes on the incomes of 36 million people,” he said.
|
|
rob62
Midland League Division Two
Posts: 210
|
Post by rob62 on Nov 18, 2023 12:59:26 GMT 1
It would be nice to think that the Chancellor would do the right thing and raise the starting point at which you start to pay income tax thereby helping millions of people on modest wages.
However I fear that he will succumb to the clamour from the right cut taxes for the rich and make Millionaires even richer
|
|
|
|
Post by northwestman on Nov 23, 2023 23:15:07 GMT 1
Most people aren’t even going to notice a 2p cut in national insurance when stealth tax rises, including freezing the tax thresholds, have hit people so hard.
|
|
|
|
Post by northwestman on Nov 23, 2023 23:29:26 GMT 1
inews.co.uk/inews-lifestyle/money/saving-and-banking/paul-lewis-transparent-budget-need-know-2771734The Chancellor Jeremy Hunt failed to announce his plan for another massive rise in income tax for 2024/25. Yes, a rise. Another £23.3billion will be taken from taxpayers in 2024/25 because the level at which income tax begins has not changed since 2021/22. As wages rise – by around 8 per cent currently – but thresholds remain frozen, more people pay tax (four million more by 2028), more taxpayers move up to pay tax at the higher rate (three million more by 2028), and Government receipts from tax grow year on year. In a couple of years, income tax will bring in a stealthy £30bn a year extra from frozen allowances. None of this was in the Autumn Statement, but was published alongside it by the Office for Budget Responsibility.
|
|
