Some higher-rate taxpayers could be up to £2,000 a year better off, under tax reforms proposed by a Tory pressure group.
Chancellor George Osborne has been urged to scrap the 40% tax band in next week’s Budget and replace it with a 45% bracket for those earning more than £62,000.
The proposals, made last weekend by Renewal, could ease the tax burden on thousands of people earning just above the 40% threshold.
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Taxes in 2014 Budget
Renewal is the latest group to urge the Chancellor to help out Britain’s middle-income earners with announcements of tax cuts in his Budget speech on March 19.
The 40% tax band threshold is set to drop from £32,011 to £31,866 in 2014/15, forcing thousands of families to hand over a bigger chunk of their salaries to the government in the next tax year.
Scrapping the 40% tax band altogether would ease the tax burden on people earning salaries not far above that £31,866 threshold, albeit at a cost to those earning a salary between £62,000 and the current 45% tax threshold of £150,000.
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Budget 2014 and low earners
The Chancellor is also facing calls to fix the minimum wage level five years in advance in order to encourage businesses to create more jobs.
The Federation of Small Businesses chairman John Allan made these proposals, suggesting this would eliminate the uncertainty which is currently preventing many businesses from recruiting.
Meanwhile, Treasury chief secretary Danny Alexander has confirmed the Liberal Democrat’s goal to raise the personal allowance to £12,500 by the end of the next government. The personal allowance will rise from £9,440 to £10,000 at the start of the next tax year.
Labour this week reaffirmed its objective to reduce higher-rate pension tax relief to 20% if the party comes into power in the next election.
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