Latest news with #DonaldParbrook
Yahoo
6 days ago
- Business
- Yahoo
UK highest income tax rate payers surpass one million
The number of UK taxpayers paying the highest income tax rate has reached 1.14 million in the 2024-25 tax year, according to UHY Hacker Young. It marks a 24% increase from the 923,000 recorded in the 2023-24 tax year. The number of 'additional rate' taxpayers, paying 45% tax, is expected to rise to 1.23 million this year. During the past five years, the number of taxpayers paying the 45% rate has surged by 163%, rising from 433,000 in the 2020-21 tax year. Neela Chauhan, partner at UHY Hacker Young, attributes this increase to 'fiscal drag,' where inflation gradually moves more taxpayers into higher tax brackets, often referred to as a stealth tax. People with earnings of more than £125,140 ($170,416) are required to pay the income tax at the additional rate of 45%. Chauhan said: 'The sharp jump in the number of people having to pay the highest rate of tax is worrying as its not caused by people who are becoming genuinely wealthier. Rather it is due to the Chancellor deciding to freeze thresholds. Though it might seem equitable for higher earners to be paying more tax, there are real concerns over the impacts of placing an ever higher tax burden on high earners. 'Increasing the tax burden too high could push these individuals to leave the country or deter talented individuals from moving to this country. There are concerns that there is a 'brain drain' already taking place due to the Government's non-doms policies.' Recently, Donald Parbrook, a senior tax partner at Azets, called on Chancellor Rachel Reeves to reconsider proposals from the Office of Tax Simplification to address the UK's complex tax system. The aim is to enhance revenue without harming business confidence or deterring investment, with the Autumn 2025 Budget as a potential platform. In response to economic changes, including trade uncertainties and fiscal tightening, the Chancellor is expected to propose significant tax reforms. These may involve revisiting earlier adjustments to inheritance tax, pension rules, and National Insurance, as public finances remain under pressure and new revenue sources are sought. "UK highest income tax rate payers surpass one million " was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-07-2025
- Business
- Yahoo
Azets senior tax partner urges UK Chancellor to revisit tax reforms
Donald Parbrook, a senior tax partner at business advisory group Azets, has urged Chancellor Rachel Reeves to reconsider proposals from the defunct Office of Tax Simplification (OTS) to address the UK's complex tax system. The call aims to enhance revenue without harming business confidence or deterring investment, using the Autumn 2025 Budget as a potential platform. In response to recent economic changes, including trade uncertainties and fiscal tightening, the Chancellor is expected to propose significant tax reforms. These may involve revisiting earlier adjustments to inheritance tax (IHT), pension rules, and National Insurance. With public finances under pressure, identifying new revenue sources is crucial. Parbrook suggests revisiting the shelved OTS reviews of Capital Gains Tax (CGT) and IHT for a more equitable approach. He said: 'Many of the OTS's recommendations, dismissed in the wake of the Covid-19 crisis, remain relevant today – especially the proposal to remove the capital gains uplift on assets passed tax-free under IHT reliefs. 'The CGT uplift was originally designed to prevent double taxation on inherited assets. But when those assets pass IHT-free and the capital gain is wiped away, no tax is paid at all. That creates a loophole that undermines the integrity of the entire system.' He highlighted a case where inherited assets are not taxed due to the CGT uplift, undermining the system's integrity. For example, shares worth £1m ($1.3m) inherited tax-free can be sold without paying CGT, leaving a £500,000 gain untaxed. Parbrook advocates for better-targeted IHT reliefs by linking eligibility to the involvement of both the deceased and the beneficiary in the business. This approach, supported by a House of Commons Committee, would reduce tax planning by passive investors while preserving family succession. Introduced in 1976, Business Property Relief (BPR) aimed to protect family businesses from IHT. Parbrook noted: 'It feels wrong that a relief introduced in 1976 to prevent families losing ownership of their business when passing from one generation to the next is now being undermined – while passive investors continue to benefit.' He also calls for reintroducing indexation or taper relief within CGT to account for inflationary gains, previously removed for individuals. He added: 'Taxing inflation is not just unfair – it is economically distorting.' Parbrook pointed to broader structural issues, noting that while the UK's Corporation Tax rate is 25%, full expensing rules allow many large businesses to pay little or no tax. A lower headline rate, aligned with international regulation and linked to domestic employment, could incentivise UK investment. With 56% of public receipts from Income Tax, National Insurance, and VAT, small increases in headline rates could yield more than adjustments to narrower taxes like CGT, IHT, or fuel duty. A controversial area for reform is the marginal 60% effective income tax rate for earnings between £100,000 and £125,140, which can reach 69.5% in Scotland with National Insurance. Parbrook said: 'This kind of stealth taxation drives damaging behavioural change – from pension distortion to reduced NHS shifts by senior staff. It is time for an honest conversation about rates, thresholds, and simplicity.' 'The Chancellor does not need to reinvent the wheel – just pick up where the OTS left off. Tackle the obvious unfairness, stop taxing inflation, and if more revenue is needed, be transparent about it. That's how you build confidence in the system.' "Azets senior tax partner urges UK Chancellor to revisit tax reforms" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
