60% Marginal Rate Still Plaguing British Workers

June 2, 2017 Taxation in UK

marginal tax rates in the UKLONDON – Hundreds of thousands of Uk taxpayers will see a tax rate of 60 percent this year, unless the government does somethign to close up an unplanned loophole.

As many as 800 000 individual taxpayers in the UK will face a marginal tax rate of 60 percent, according to the conclusion of new research conducted by the UK think tank the Institute of Fiscal Studies.

Under the current tax regulations in the UK, individuals who earn between GBP 100 000 and GBP 123 000 will face a marginal tax rate of 60 percent, due to a loss of their tax-free personal tax allowance.

The high marginal tax rate is an anomaly, and was not initially intended to be part of the tax system, however, the government has consistently failed to fix the situation.

If the government does not remedy the oversight in the tax code, by the end of next year the number of people falling into the loophole will have risen to as much as 1 million taxpayers.

The rising number of people who find themselves in the 60 percent bracket is caused by wage inflation, as tax thresholds are not pegged to inflation or wage rises, and even marginal wage increases will see people paying the higher rate.

It is estimated that in 2010-11 the number of people who paid the 60 percent marginal tax rate was approximately 588 000.