Two Million Britons Risk Facing 60% Income Tax This Year
# Two Million Brits Face New 60% Tax Trap This Year – Here's How to Avoid It
## A significant number of taxpayers could find themselves paying a staggering 60% tax on their income.
Approximately two million taxpayers in the UK are at risk of entering a tax trap where they may be required to pay an effective rate of 60% on their earnings. This predicament arises primarily because of the gradual reduction in the personal allowance for income tax, which begins to taper off when individuals earn above £100,000.
This situation has been underscored by experts who have pointed out that the current thresholds will affect not just high earners but also those who might not typically consider themselves wealthy. For every £2 earned over the £100,000 limit, an individual loses £1 of their personal allowance, leading to this steep marginal tax rate.
The concern is compounded by the ongoing financial pressures many families face. Increasing living costs and the potential for rising national insurance contributions may see more taxpayers eroded by financial burdens, inadvertently pushing them into this tax trap.
Independent financial advisers are urging those who may be impacted to take proactive measures, such as exploring pension contributions or tax-efficient savings accounts, which could mitigate some of the financial fallout. Strategies that aim to structure income effectively could help taxpayers manage their exposure to this high rate more effectively.
This report is for informational purposes only and is not financial advice.