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Don’t get dragged into a higher rate of tax – plan now!

New research by the House of Commons Library has revealed that an additional 750,000 people in London and the South East soon face paying a higher rate of income tax following a freeze to personal allowances.

The new data has revealed that inflation and the ongoing freeze to personal tax allowances will result in 370,000 Londoners paying the 40p tax rate by 2025/26, while a further 380,000 taxpayers in the wider South East region, including many in and around High Wycombe, face higher tax bills as well.

However, it isn’t only higher earners that face a higher rate of tax, with more than 350,000 in the South East being pulled into the 20p basic rate of income tax by the end of the current four-year tax threshold freeze.

Around four in 10 of those paying this higher rate of tax will be living in London and the South-East. In fact, more people will enter the higher tax rate in London than in the West Midlands, North East, Yorkshire and The Humber combined, according to this new study.

In light of these findings, it has become more important than ever for taxpayers to take additional steps to manage and reduce their liabilities by maximising the allowances and reliefs that exist.

To make the most of the potential tax savings that remain available, individuals are being encouraged to seek professional advice regarding:

  • Pension contributions
  • Tax-efficient investments
  • Inter-spouse transfers
  • The sale and disposal of assets
  • Inheritance tax and estate planning

Are you concerned about paying more tax? Please contact your Seymour Taylor representative today or email enquiries@stca.co.uk or call 01494 552100.

This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 25th May 2022.