Many middle-class professionals are paying an income tax rate of 60% as a result of a little-understood policy introduced by the last Labour government which affects more than 500,000 people, a leading economist has warned.
The Institute for Fiscal Studies (IFS) said that it is "hard to make much sense" of a loophole in income tax rules which means that those earning between £100,000 and £120,000 now pay 60p of every pound they earn in tax. The hidden tax rate is a third higher than the 45p top rate of tax which is widely believed to be the maximum raid on income, the Telegraph reports. Paul Johnson, the director of the IFS, said that there was "no plausible rationale" for the income tax system and accused Governments led by both main parties of introducing "poor tax policies". "There is a basic rate...
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