Today’s Budget was rightly regarded as one of the most far reaching for many years with huge implications for household budgets.
The blizzard of announcement and tax changes revealed by Rachel Reeves in the Commons is aimed at putting the public finances on a more sustainable footing and promoting long term investment.
While sticking to her commitment not to increase rates of income tax, NI on workers, or VAT, other announcements will increase the burden on many London families, particularly in higher earning brackets.
Today the Standard publishes a ready reckoner calculator to allow readers to work out whether they will be better or worse off once all the measures come into effect.
Continued freezing of income tax thresholds will inevitably means many higher earnings London workers will be caught by the 40% higher rate that kicks in at £50,270, or the 45% additional rate that is levied on earnings above £125,140. This effect is known as fiscal drag.
Recent figures from the HMRC revealed that the number of people in the UK paying the top rate of income tax is set to pass one million for the first time in the current financial year, with more than a third of them living in London,
There is also a “tax trap” above the £100,000 income mark when workers start losing their personal allowances which disproportionately effects high pay, high cost London
HMRC also expect more pensioners becoming taxpayers for the first time this year, because of a combination of frozen tax bands and increases in the value of the state pension.
