Published: 02/07/2024 By Hannah Duncan
The number of additional rate taxpayers in the UK will surpass 1 million for the first time due to frozen tax thresholds. Since the thresholds were frozen in 2021, HMRC is expected to collect £63.2bn in income tax this year, bringing the total to £272.6bn, which is £16.3bn more than the previous year.Since 2021, 1.77 million pensioners have been forced to pay income tax, and this number is expected to grow as thresholds remain unchanged until at least 2028. Read our blog on ‘A guide to paying the tax due on your State Pension’
Since 2010, there have been up to 6.1 million more taxpayers, including 3.3 million more higher rate taxpayers and 900,000 additional rate taxpayers. HMRC is also expected to collect an additional £10.4bn in tax from savings in 2024/25.
It’s been noted by industry experts that higher rate taxpayers will quickly exceed their Personal Savings Allowance; with good interest rates on offer like 5.25%, a balance of just under £10,000 would result in a Personal Savings Allowance being reached and any subsequent interest being subjected to 40% tax.
Basic rate taxpayers will pay 20% on savings over £19,050. To avoid this, you can use a cash ISA, which avoids paying tax on interested earned. Read our blog on ‘Making the most of your long-term savings’
Please get in contact if you need advice with your tax or pension, call us on 020 8661 7878 or email bsg@turpinba.co.uk alternatively fill out our contact us form