Lower earners will miss out says EY
19 March 2014
John Cooney, EY's head of private client tax services, comments on the Budget:
“A politically popular move but today’s announced increase in the personal allowance to £10,500 is going to miss the mark if the Government’s intention was to help the lowest paid. The lowest decile of earnings peaks at just above £6,800 per annum, so these individuals already fall outside the income tax net. Instead the Government could have looked further at tax credits, the minimum wage or indeed national insurance contributions, which hits earnings earlier than income tax.
“By contrast, for the first time, those paying 40% tax will benefit from the full increase to the personal allowance, effectively saving 40% tax on the full amount of the increase.”
For more information on the 2014 Budget, visit the EY 2014 Budget page.