Record Number Of Britons Paying Income Tax This Year

by Jason Gorringe, Tax-News.com, London

27 August 2003

Recent figures from the Inland Revenue show that a record 30.7 million people will pay income tax in the United Kingdom this year, an increase of 4.5 million since Chancellor of the Exchequer Gordon Brown took control of the Treasury in 1997.

This increase will yield the Chancellor some £124 billion in tax receipts this year, again a record high figure and is a significantly higher sum than the £79.5 billion take from income tax when Labour came to power six years ago.

Despite this, Brown still faces a budget deficit of at least £24 billion this year (by his own estimates), though some economists have put the figure nearer $34 billion, a fact that has led many observers to conclude that taxes will have to rise to meet the public sector borrowing requirement.

Whilst the government is happy to accept the Inland Revenue's conclusion that the burgeoning Treasury coffers are due to the success of the Mr Brown's economic policies, the plain fact is that more and more taxpayers are becoming the victims of 'fiscal creep', that is their incomes are dragging them into the higher tax brackets which have only moved in line with price inflation during Brown's tenure.

According to the Inland Revenue's figures, 3.3 million taxpayers will find themselves in the 40% tax bracket this year, 1.2 million more than in 1997. Brown's decision to freeze the income tax threshold for this year and next is likely to increase this number still further.

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