UK Taxpayers Enjoying Lower Taxes
August 7, 2012 Taxation in UK
LONDON – UK taxpayers are now paying less income tax per year then they were in 2007, due to increased tax allowances.
Between 2007 and 2010 the amount of income tax collected by the HM Revenue and Customs rose by 7 percent, and over the same time period income levels grew by an average of 11 percent, according to the conclusions drawn in new research completed by UHY Hacker Young and released on August 6th.
According to the tax manager at UHY Hacker Young Rob Durrant-Walker, the new research shows that “…for the vast majority of taxpayers the effective tax rate fell during the financial crisis.” However, he also suggested that the research has shown evidence of survivor bias, with financial situations only improving for taxpayers who have managed to keep their jobs through the economic downturns in recent years.
The decreasing tax liabilities have been attributed to an increase in personal tax allowances over the time period, with basic personal tax allowances rising from GBP 5 035 to GBP 6 475, and allowances for pensioners increasing from GBP 7 280 to GBP 9 490.
Rob Durrant-Walker did conceded that the research only took into account direct taxes and did not account for indirect taxes such as VAT, and it is possible that some taxpayers are now worse off than in 2007 as due to inflation and increase in indirect taxes.
Photo by Karen V Bryan