New Year Tax Rise will Hit the Wealthy

New Year Tax Rise will Hit the Wealthy

New Year Tax Rise will Hit the Wealthy

  • New 50% rate for higher earners will have impact
  • Withdrawal of the personal allowance for those earning over £100,000
  • VAT up to 17.5%

High earning UK residents will be hit hard when the new income tax rate of 50% becomes law in 2010, according to ACCA’s head of taxation Chas Roy-Chowdhury.

The new rate will affect up to 350,000 UK residents and a majority of those can be found within the UK’s wealthiest towns, from Dulwich in South east London to Southwold in Suffolk.

As an example, someone who earns £250,000 per annum will pay in 2010 £10,000 more in tax. This is due to the 50% rate applying to all salaries above £150,000.

 Chas Roy-Chowdhury says:

“This new 50% tax rate has been trailed for some time now. But it will still come as a surprise and shock to many. The amount of tax paid can be confusing, so if people of any income – not just higher rate earners are concerned, then they need to liaise with their local tax office and possibly seek professional advice to make sure all new rules are addressed and all legal options are utilised.”

The UK’s wealthiest residents will lose their tax free personal allowance as well as having to pay the higher 50% rate of tax.

Mr Roy-Chowdhury adds:

“It is not only the new legislation that can be confusing, but also the fact there they will be further changes in 2010, especially if a new government comes in. While inheritance tax will most likely stay at the same level, there will be more of a focus on green taxes.”

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