Home Business NewsBusiness Reduction in overall rate of income tax would not help

Reduction in overall rate of income tax would not help

by LLB Reporter
20th May 22 12:01 pm

Reports that the Government reduce the overall rate of income tax by 1p in April 2023 does nothing to help the current cost of living crisis and would do little to lessen the impact of frozen rate bands, say leading tax and advisory form Blick Rothenberg

Robert Salter a director at the firm said: “Even if they did cut the tax rate by 1% as suggested, this won’t match up to the fact that NICs have already risen by 1.25% from April this year.”

He added: “The 1% cut doesn’t lessen the impact of the frozen rate bands and 20% bands for most people. The reality is that people being pushed into paying tax because of frozen personal allowances or paying tax at 40% or above could still be significantly worse off in many cases.”

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Robert said: “There is also the issue of whether the 1% would Just regular income tax or also dividend taxes? I suspect at this stage, that the rate would only be for regular income tax and not necessarily for dividend taxes.”

He added: “If so, this could easily, result in freelancers working through digital service companies facing high taxes which are, in part, – designed to pay all the self-employment income support scheme, SEIS, and furlough grants – which a large number of them weren’t actually able to benefit from.”

Robert said: “There needs to be some creative thinking from the government about how to address the current crisis and this idea is not one of them.”

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