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After the 2010 election, there were three million people paying tax in the 40p bracket. Since then, the earnings threshold has dropped from £43, 875 to £41,450 – and many of those now paying the higher rate of tax may not consider themselves to be wealthy and are struggling to bring up families and pay mortgages. Seeking Debt Management Advice can be crucial for taxpayers trapped in the system, especially if they are on the borderline of the earnings threshold.

The latest changes come into effect in May and could push many taxpayers over the edge financially and in need of debt advice. Mortgages are also increasing this month for those paying SVR (standard variable rate) mortgages.

The sort of earners likely to be affected by the latest 40p tax hikes include lecturers, middle managers, health staff and senior school teachers, many of whom will be of an age when they are bringing up families or have longstanding financial commitments like mortgages. As a result, more professional people may be forced to seek debt advice if they also have outstanding credit card loans or bank loans.

However, a spokesman for the Treasury said in a statement:

“The Government has increased the personal allowance, which benefits basic rate taxpayers – and most higher rate taxpayers – this year and next.”

The Institute of Fiscal Studies has found that taxpayers who are just within the new 40p threshold are most likely to lose out – but their income may actually be “relatively modest” and some taxpayers may not have sufficient income to be able to manage everyday expenses.

Labour Treasury spokesman Chris Lesley called the coalition’s tax increases a “tax grab” and said:

“Hundreds of thousands of people will be reeling after checking their pay slips this month – they will be shocked by the sleight of hand in this tax grab.”

The Institute of Fiscal Studies has also said that more people will be dragged into the 40p tax bracket by the coalition’s tax policies – currently 12.5% of taxpayers are paying the 40p tax rate but by 2013-14, the total could be 15%, meaning more professionals seeking debt management solutions as they struggle to keep families.

The tax increases follow the announcement of the 2012 Sunday Times Rich List this week, which revealed that – as millions of ordinary Britons face mortgage and tax hikes – the rich are maintaining their position and in many cases are even wealthier.

The figures from the HMRC show that low income workers are benefiting from new tax rates, with a further 2.3 million beneath the basic rate since 2010. However, these workers may also be facing increases in mortgage rates, meaning in real terms many will not benefit and may require debt management advice to see them through a harsh economic period.



The article is a courtesy by Eva Smith who represents Debt Local, a professional and friendly organization offering debt help and free debt advice to UK people to Manage Debt Problems with best & favorable debt solutions. It has expert Debt Advisors who counsel and comfort clients with the commitment of confidentiality just like a personal financial consultant. Moreover People seeking debt advice have No Obligation to use the services.