{"id":9493,"date":"2022-07-25T16:12:03","date_gmt":"2022-07-25T15:12:03","guid":{"rendered":"https:\/\/sbwm.uk\/?p=9493"},"modified":"2022-07-25T16:12:05","modified_gmt":"2022-07-25T15:12:05","slug":"60-income-tax-reappears","status":"publish","type":"post","link":"https:\/\/sbwm.uk\/v3\/newsletter\/60-income-tax-reappears\/","title":{"rendered":"60% income tax reappears"},"content":{"rendered":"<!--themify_builder_content-->\n<div id=\"themify_builder_content-9493\" data-postid=\"9493\" class=\"themify_builder_content themify_builder_content-9493 themify_builder tf_clear\">\n                    <div  data-lazy=\"1\" class=\"module_row themify_builder_row tb_zjlh258 tb_first tf_w\">\n                        <div class=\"row_inner col_align_top tb_col_count_1 tf_box tf_rel\">\n                        <div  data-lazy=\"1\" class=\"module_column tb-column col-full tb_da9n259 first\">\n                    <!-- module text -->\n<div  class=\"module module-text tb_pws9259   \" data-lazy=\"1\">\n        <div  class=\"tb_text_wrap\">\n        <p><b>The high marginal tax rates created by phasing out the personal allowance are back in the news.<span class=\"Apple-converted-space\">\u00a0<\/span><\/b><\/p><p>\u2018A million to pay 60% income tax within years,\u2019 ran a recent headline in The Sunday Telegraph. The next day The Times picked up on the same story with the article \u2018Inflation may leave million more workers paying 60% tax\u2019.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p><p>Whether either article counts as \u2018news\u2019 is debatable. The 60% income tax rate (or 61.5% on earnings in Scotland) has been around, in one form or another, since 2010\/11. It is not, as The Times suggested, the result of \u2018a glitch in the personal allowance regime\u2019 but was the product of a carefully crafted piece of legislation. At the time, the aim was to raise extra revenue while keeping the threshold for the newly introduced 50% additional rate tax at \u00a3150,000.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p>    <\/div>\n<\/div>\n<!-- \/module text --><!-- module text -->\n<div  class=\"module module-text tb_rdau260  repeat \" data-lazy=\"1\">\n        <div  class=\"tb_text_wrap\">\n        <p><b>How the 60% tax rate happens<\/b><\/p><p>In 2022\/23, a client expects to have an income of \u00a3100,000 and is therefore entitled to a personal allowance of \u00a312,570. If an unexpected bonus of \u00a310,000 is received, total income will be \u00a3110,000 and the clients personal allowance will be reduced by half of the amount by which her total income exceeds \u00a3100,000 \u2013 i.e. \u00a35,000. As a result, the client will not only pay tax of \u00a34,000 on their bonus (at 40% outside Scotland), but they will also have to pay \u00a32,000 of tax on the \u00a35,000 of their income no longer covered by the personal allowance. The result is:<\/p><p>\u00a0<\/p><p><a href=\"https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income.png\"><img decoding=\"async\" class=\"alignnone size-full wp-image-9496 lazyload\" data-src=\"https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income.png\" alt=\"\" width=\"1049\" height=\"102\" data-srcset=\"https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income.png 1049w, https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income-300x29.png 300w, https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income-1024x100.png 1024w, https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income-768x75.png 768w\" data-sizes=\"(max-width: 1049px) 100vw, 1049px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1049px; --smush-placeholder-aspect-ratio: 1049\/102;\" \/><\/a><\/p><p>If a bonus of over \u00a325,140 is received, they would lose all their personal allowance of \u00a312,570.<\/p>    <\/div>\n<\/div>\n<!-- \/module text --><!-- module text -->\n<div  class=\"module module-text tb_tipo260   \" data-lazy=\"1\">\n        <div  class=\"tb_text_wrap\">\n        <p>The newspaper article indirectly highlighted that:<\/p><ul><li>The \u00a3100,000 threshold at which the personal allowance is tapered has been unchanged since 2010; and<\/li><li>The personal allowance has almost doubled since 2010, resulting in a \u00a325,140 band of income in which the 60% rate can bite.<\/li><\/ul><p>Both factors mean that more taxpayers are being caught as incomes rise over time.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p><p>The one piece of good news is that if you are hit by 60% income tax you may also be able to claim similar reliefs on personal pension contributions or gift aid.<span class=\"Apple-converted-space\">\u00a0<\/span><\/p><p><b><i>Tax treatment varies according to individual circumstances and is subject to change.<\/i><\/b><\/p><p><b><i>The Financial Conduct Authority does not regulate tax advice.<span class=\"Apple-converted-space\">\u00a0<\/span><\/i><\/b><\/p>    <\/div>\n<\/div>\n<!-- \/module text -->        <\/div>\n                        <\/div>\n        <\/div>\n        <\/div>\n<!--\/themify_builder_content-->\n\n\n<p class=\"wp-block-paragraph\"><\/p>","protected":false},"excerpt":{"rendered":"","protected":false},"author":2,"featured_media":9498,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":33,"footnotes":""},"categories":[33],"tags":[],"class_list":["post-9493","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newsletter","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"builder_content":"<p><b>The high marginal tax rates created by phasing out the personal allowance are back in the news.\u00a0<\/b><\/p><p>\u2018A million to pay 60% income tax within years,\u2019 ran a recent headline in The Sunday Telegraph. The next day The Times picked up on the same story with the article \u2018Inflation may leave million more workers paying 60% tax\u2019.\u00a0<\/p><p>Whether either article counts as \u2018news\u2019 is debatable. The 60% income tax rate (or 61.5% on earnings in Scotland) has been around, in one form or another, since 2010\/11. It is not, as The Times suggested, the result of \u2018a glitch in the personal allowance regime\u2019 but was the product of a carefully crafted piece of legislation. At the time, the aim was to raise extra revenue while keeping the threshold for the newly introduced 50% additional rate tax at \u00a3150,000.\u00a0<\/p>\n<p><b>How the 60% tax rate happens<\/b><\/p><p>In 2022\/23, a client expects to have an income of \u00a3100,000 and is therefore entitled to a personal allowance of \u00a312,570. If an unexpected bonus of \u00a310,000 is received, total income will be \u00a3110,000 and the clients personal allowance will be reduced by half of the amount by which her total income exceeds \u00a3100,000 \u2013 i.e. \u00a35,000. As a result, the client will not only pay tax of \u00a34,000 on their bonus (at 40% outside Scotland), but they will also have to pay \u00a32,000 of tax on the \u00a35,000 of their income no longer covered by the personal allowance. The result is:<\/p><p>\u00a0<\/p><p><a href=\"https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income.png\"><img decoding=\"async\" src=\"https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income.png\" alt=\"\" width=\"1049\" height=\"102\" srcset=\"https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income.png 1049w, https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income-300x29.png 300w, https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income-1024x100.png 1024w, https:\/\/sbwm.uk\/v3\/wp-content\/uploads\/2022\/07\/60-income-768x75.png 768w\" sizes=\"(max-width: 1049px) 100vw, 1049px\" \/><\/a><\/p><p>If a bonus of over \u00a325,140 is received, they would lose all their personal allowance of \u00a312,570.<\/p>\n<p>The newspaper article indirectly highlighted that:<\/p><ul><li>The \u00a3100,000 threshold at which the personal allowance is tapered has been unchanged since 2010; and<\/li><li>The personal allowance has almost doubled since 2010, resulting in a \u00a325,140 band of income in which the 60% rate can bite.<\/li><\/ul><p>Both factors mean that more taxpayers are being caught as incomes rise over time.\u00a0<\/p><p>The one piece of good news is that if you are hit by 60% income tax you may also be able to claim similar reliefs on personal pension contributions or gift aid.\u00a0<\/p><p><b><i>Tax treatment varies according to individual circumstances and is subject to change.<\/i><\/b><\/p><p><b><i>The Financial Conduct Authority does not regulate tax advice.\u00a0<\/i><\/b><\/p>","_links":{"self":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts\/9493","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/comments?post=9493"}],"version-history":[{"count":0,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/posts\/9493\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/media\/9498"}],"wp:attachment":[{"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/media?parent=9493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/categories?post=9493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sbwm.uk\/v3\/wp-json\/wp\/v2\/tags?post=9493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}