According to the latest calculations, “middle” income households may be negatively impacted by roughly \u00a34,000 in 2024\u20132025 as a result of continuous freezes on income tax and Child Benefit tax limits. <\/p>\n\n\n\n
Fiscal drag means that families earning between \u00a330,000 and \u00a3100,000 will still be worse off despite the Chancellor’s two percentage point reduction to the National Insurance rate for employment, according to NFU Mutual’s study.<\/p>\n\n\n\n
Millions of people are being forced into the higher rate tax band as a result of a six-year freeze on the personal allowance and higher rate tax band, which has increased earnings. <\/p>\n\n\n\n
Meanwhile, the High Income Child Benefit tax Charge threshold of \u00a350,000 has not risen since it was introduced in 2013, leading to more families being affected.<\/p>\n\n\n\n
According to the estimate, fiscal drag will cause a family of four with the highest earner earning a salary of \u00a360,000 to owe \u00a33,953 in additional taxes and National Insurance contributions (NICs) in 2024\u20132025. <\/p>\n\n\n\n
There would be an additional \u00a33,905 in tax if the salary was \u00a370,000, and \u00a32,024 if it was between \u00a380,000 and \u00a3100,000 in salary. Moreover, due to fiscal drag, parents who earn \u00a330,000 and have two children are liable for an additional \u00a3751 in tax and NICs.<\/p>\n\n\n\n
Sean McCann, chartered financial planner at NFU Mutual, said: \u201cIf the tax-free Personal Allowance remains frozen this year, as previously announced, it will be 60 years since it was frozen for this long \u2013 and that deep freeze is having a huge impact on households.<\/p>\n\n\n\n
\u201cMiddle income families with children are bearing the brunt of the pain, particularly once one parent\u2019s income hits \u00a360,000 and they lose all their Child Benefit through the High Income Child Benefit tax Charge.\u201d<\/p>\n\n\n\n
He added: \u201cWhat were once deemed high levels of income are becoming more common, affecting more families as a result.\u201d<\/p>\n\n\n\n
If the High Income Child Benefit tax Charge (HICBC) threshold had increased with Consumer Prices Index (CPI) inflation each year, it would stand at \u00a368,461, research has found.<\/p>\n\n","protected":false},"excerpt":{"rendered":"
According to the latest calculations, “middle” income households may be negatively impacted by roughly \u00a34,000 in 2024\u20132025 as a result of continuous freezes on income tax and Child Benefit tax … <\/p>\n