Mar 3, 2021

Budget 2021: Million more set to pay income tax by 2026

More than one million people are set to start paying income tax in the next five years, official forecasts say, due to a move announced in the Budget. Commentators have called it an increase in an individual's tax burden "By stealth". At present, people start paying 20% income tax when they earn £12,500 a year, known as the personal allowance. The Office for Budget Responsibility, the government's official but independent forecaster, said this policy would bring 1.3 million more people into paying income tax and one million more into paying at the higher rate. "Becky O'Connor, head of pensions and savings at Interactive Investor, said:"Freezing allowances is a back-handed way of raising taxes, as wage inflation and asset price inflation increase the number of people pushed over the thresholds at which they have to pay more tax.

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