- Freezing the point at which higher rate kicks in would raise billions from 2020
- Institute for Fiscal Studies say it’d raises taxes on those earning over £12,500
- It would drag an extra 400,000 people into the 40p income tax band in just two years
Hundreds of thousands more families could be forced to pay the higher 40p rate of income tax under plans to give the NHS a £20.5billion-a-year cash boost.
Ministers have been told that freezing the tax-free allowance at £12,500 and the point at which the higher rate kicks in at £50,000 would raise billions of pounds from 2020.
But the Institute for Fiscal Studies said this would raises taxes on everyone earning over £12,500 and drag an extra 400,000 people into the 40p income tax band in just two years.
Prime Minister Theresa May and Health Secretary Jeremy Hunt visit the Royal Free Hospital in London on Monday
That could take the total number paying higher rates of income tax above five million for the first time – undermining Tory claims to be a low-tax party.
The tax burden facing families is already at its highest level for half a century but looks set to become even more punishing as ministers pump extra funds into the NHS.
Theresa May has warned that taxes will rise to fund an increase in spending on the NHS worth nearly £400million a week by 2023.
The IFS said freezing tax thresholds could raise £3.5billion in two years. ‘This would mean higher income tax bills for everyone with an income of more than £12,500 a year,’ it said.
Theresa May has warned that taxes will rise to fund an increase in spending on the NHS worth nearly £400million a week by 2023
Stuart Adam, a senior research analyst at the IFS, said: ‘There has been a long-run upward trend in the number of higher-rate taxpayers, and a much bigger share of the population now pays higher rate tax than before.’
The total has risen to 4.7million from 3.2million when the Tories took power in 2010.
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