A 'tax trap' could be on the horizon for tens of thousands of UK families. An expert has issued the warning saying that effective tax rates of at least 80%, and potentially as high as 96%, could be on the cards for some households in a benefits double-whammy.
This week, the Mirror reported that as the cost of living rises, around 50,000 families will be eligible for Universal Credit (UC) - despite one member earning over £50,000. It said that this will lead to a 'messy' situation where their UC and child benefit are both being withdrawn at the same time as they earn more money.
Of course, there will also be deductions for income tax, National Insurance, student loan repayments and pension on top of that. Think tank the Resolution Foundation warned this means that combined, between 80p and 96p of every extra £1 these people earn will never reach their bank account.
