Welcome to the August 2024 Newsletter from Beatons Group
More than half a million people are paying up to 60% tax on the top portion of their pay, according to a recent Freedom of Information (FOI) request.
Meanwhile, the government used the recent King's Speech to unveil a range of bills that 'put growth at the heart of the legislative agenda'.
More than 500,000 individuals caught in 60% tax trap
An FOI request has revealed that over half a million people are paying up to 60% tax on the top portion of their pay.
Individuals with a salary between £100,000 and £125,140 are at risk of falling victim to a 'tax trap'. This trap takes effect when the 40% higher income tax rate combines with the tapered loss of the £12,570 personal allowance. For every £2 earned above £100,000, an individual loses £1 of their personal allowance.
Once a worker earns £125,140, this reduces to zero. This means that workers caught in the tax trap pay 60p in tax on their earnings plus 2p in national insurance contributions (NICs). The tax rate reverts to 45p in every pound once the personal allowance is lost.
According to the FOI request, the number of workers who fell into the income range rose by 23% to 537,000 between 2021/22 and 2022/23.
Commenting on the issue, a spokesperson for the Treasury said: 'We are committed to keeping taxes on working people as low as possible while maintaining fiscal responsibility, that's why we've pledged to not raise income tax, national insurance or VAT.
'We are a government of wealth creation and believe the best way to responsibly improve living standards is through economic growth by guaranteeing stability, stimulating investment and reforming our planning and skills systems to unlock Britain's potential.'
King's Speech unveils raft of bills designed to 'unlock economic growth'
On Wednesday 17 July King Charles III delivered the 2024 King's Speech at the State Opening of Parliament and announced draft laws which include plans to accelerate housebuilding and roll out 'greater devolution' of decision making to metro mayors and combined authorities in England.
In the Speech, the government also pledged to:
- Give renters 'greater rights and protections' by ending no-fault evictions.
- Remove the VAT exemption for private school fees.
- Establish publicly owned Great British Energy.
- Bring train operators into public ownership.
Commenting on the Speech, Prime Minister Keir Starmer said: 'Now is the time to take the brakes off Britain. For too long people have been held back, their paths determined by where they came from - not their talents and hard work.
'I am determined to create wealth for people up and down the country. It is the only way our country can progress, and my government is focused on supporting that aspiration.'
Meanwhile, business group the British Chambers of Commerce (BCC), which recently called for the government to introduce measures that help 'unlock investment', stated that the measures included in the Speech 'show the voice of business has been heard'.
Shevaun Haviland, Director General of the BCC, said: 'There is much in [the] speech which shows the voice of business has been heard and that government is introducing measures that benefit firms and help unlock investment.'
'We want to work in partnership with the government to make this happen and shift the economy out of first gear to get it motoring again.'
ESSENTIAL TAX DATES FOR AUGUST
2 August
Deadline for submitting P46(Car) for employees whose car/fuel benefits changed during the quarter to 5 July 2024.
19 August
PAYE, Student loan and CIS deductions are due for the month to 5 August 2024.
QUOTE OF THE MONTH
'The lack of promised legislation to tackle late payments and poor payment practices by bigger businesses to their small business suppliers is the most serious omission for our community and will hold back economic growth.''
Tina McKenzie, Policy Chair at the Federation of Small Businesses (FSB), commenting on the announcements made during the 2024 King's Speech at the State Opening of Parliament.
ON OUR WEBSITE
A wealth of resources for businesses
With topics ranging from the Bribery Act 2010 to the National Minimum Wage and the National Living Wage, the Your Business section of our site is a hub of essential information.
Useful information for individuals
For a comprehensive bank of guides covering Venture Capital Trusts, the dividend nil-rate and much more, please visit the Your Money area of our website.
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