As the first day of the new tax year, today brings new taxes including the government’s decision to lower the rate at which the higher 40% tax is paid from £43,875 to £42,475.
But families are already struggling to make their money stretch, as recent research from the Centre for Economics and Business Research, on behalf of BBC’s Panorama, showed that since the height of the recession in 2009, the average employee has had to take a 5% pay cut, which is equivalent to £1,088 per year.
And in addition to low wages, Brits are also struggling with inflation at a 20-year high, an increase in VAT from 17.5% to 20% and high fuel costs.
Mike Warburton, Senior Tax Partner at accountants Grant Thornton, told This is Money: “Those on the lowest incomes will benefit most from the tax changes with those on middle incomes being squeezed.
“The hard fact is that we are all having to tighten our belts this year as we cope with the increase in VAT together with rising fuel and most other costs.”
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