Income Tax is a levy which Britons will need to pay on certain types of income and is collected by HM Revenue and Customs (HMRC). People will need to pay tax on their earnings, and profits made if they are self-employed, as well as certain state benefits. Also included within the Income Tax take are Government support schemes such as furlough and SEISS.
However, it is understood the Chancellor has been plotting a change to the way Income Tax is currently administered and collected.
Reports have suggested Mr Sunak is set to introduce what is being described as a “stealth” rise to Income Tax in today’s Budget.
Reports from The Times suggest Mr Sunak will freeze the threshold where people begin to pay basic and higher rate Income Tax.
Freezing the basic rate, otherwise known as Personal Allowance, could occur for at least three years.
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“Even after we’ve recovered from covid, debt will continue to rise indefinitely – that’s not a good situation.”
Mr Sunak said he was determined to deliver on “promises” previously made to the British public that the Government would be “responsible” with their money.
A change to Income Tax as it currently stands could affect huge swathes of the country, and potentially hit working Britons in the pocket.
However, it may be felt the move is necessary following high levels of Government spending over the past year due to the pandemic.
Recently, Express.co.uk spoke to Christine Ross, Head of Advice at Handlesbanken Wealth Management about the matter.
She provided further insight into the steps the Chancellor could take today when it comes to tax rises.
Ms Ross commented: “The easy thing for the Chancellor to do, but unpopular, is to increase the rate of Income Tax, because that would gain the most amount of money.
“I think together Income Tax, National Insurance contributions and VAT account for nearly 60 percent of tax take – so these are the big winners.
“One option would be to put a penny on the basic rate, another would be to shift the threshold so you could find more people going into the 40 percent rate, although I do not think that is as likely.”
Another option Ms Ross discussed was to increase the top rate of Income Tax, as has been done in the past.
She added that it could be a more “palatable” move for the Exchequer to increase the very top rate of Income Tax.
Mr Sunak’s full plans are expected to be announced after midday today when he lays out his Budget proposals.
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