Monday Apr 29, 201303:12 PM GMT
UK middle-classes face 65% tax rate
Sat Jan 5, 2013 11:21AM
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The British government has been warned that cuts to child benefit payments, which will take effect on Monday, will punish more than a million middle-class families with a tax rate of 65 percent.


Changes to child benefit payments will lead to “incoherence” in the welfare system and punish more than a million middle-class families, the independent Institute for Fiscal Studies (IFS) warned.

According to IFS, thousands of families face a 65 percent tax rate as a result of the changes, meaning that they will pay almost two-thirds of every extra pound they earn over £50,000 into tax.

The study warned that the situation could lead to vicious consequences including people working shorter hours or diverting money into their pension pots to fall short of the threshold.

Conservative MPs have protested both the policy and its purpose.

“We redoubled our efforts in 2012 to talk about strivers and nuclear families. But they are the sort of people who are going to be most hit by this measure,” Mark Field, the MP for the Cities of London and Westminster said.

Shadow Treasury Minister Chris Leslie also described the policy as "unfair" and "an administrative nightmare".

BGH/AMR/HE
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