Tax expert Owen Kyffin has warned that a quirk in the tax rules could push more high earners into paying 60% income tax.
Kyffin, a partner in the leading accountants and business advisers Whitley Stimpson, which has offices in Banbury, Bicester, Witney and High Wycombe, said: “It comes about because people earning between £100,000 and £123,000 a year lose their tax-free personal allowance. It is a situation that is not widely known and has been highlighted through a report from the Institute for Fiscal Studies.”
The report says the anomaly is the result of a rule whereby people’s personal allowance reduces by £1 for every £2 that their adjusted net income rises above £100,000 and that by the end of the next tax year a million people will be dragged into the 60% bracket.
He added: “The situation could have been solved by the politicians during the general election campaign but it was not addressed by either of the two major parties. The situation is becoming more complex and it could pay higher income earners to check their tax situation.
“In fact it would be sensible for most people to check that the Inland Revenue figures are correct in relation to the amount of tax they should be paying because of continual changes in the personal tax allowances.”