In its latest fiscal risks and sustainability report, the Office for Budget Responsibility (OBR) has raised a significant alarm about the growing pressure on UK taxpayers. Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, highlights.
“The OBR (Office for Budget Responsibility) has released its latest fiscal risks and sustainability report today. It is startling to see that 3.5 million consumers are going to be pulled into the higher-rate tax band of 40% by 2028-29. The fiscal drag is prevalent, and these latest statistics should be a stark warning for consumers.
Savers are going to be in dismay of the fiscal drag, as any basic-rate taxpayer who moves up to the higher-rate tax bracket at 40% will see their Personal Savings Allowance (PSA) halved, from £1,000 worth of savings interest tax-free each year to just £500. Savers need to take advantage of their ISA allowance and protect their hard-earned cash from tax. The debate on whether the yearly cash ISA allowance should be cut is ongoing, so savers will no doubt want to maximise their deposits in the meantime.”
To quote directly from the OBR: “The changes to personal tax thresholds are expected to bring 4.2 million additional taxpayers into income tax, and shift 3.5 million taxpayers into the higher-rate band, and 0.6 million into the additional-rate band, by 2028-29.”
