Third of Workers to Pay Higher Tax 
Figures released by the tax office show that almost a third more workers are set to pay tax at the higher threshold of forty percent during the current financial year; pushing the total paying the higher rate tax to over four million.

The increase in higher-rate taxpayers is being attributed to reductions in the threshold for the forty percent tax, combined with the “fiscal drag” which sees tax bands staying where they are, instead of moving up with inflation, which results in inflation-linked wage increases pushing more people into the higher rate tax bonds.

John Whiting, from the Chartered Institute of Taxation (CIOT): “The combination of that happy couple, fiscal drag and cuts in the higher rate threshold, is pushing more people into the higher rates where they can contribute more to cutting the deficit.”

However, a spokesperson for the Treasury has argued that the higher rate tax threshold remains the same as last year; adding: “The increase to the personal allowance in 2012-13 has not created new higher rate taxpayers, although there will be some people whose income increases over the two years, meaning that they move into the higher rate.”

Although the number of higher-rate taxpayers has been estimated to increase over the next year; figures from the tax office have also revealed that the total of taxpayers during the financial year is set to decrease to fewer than thirty million.

The drop in taxpayers is due to the lowest paid being removed from the tax system altogether following an increase in personal tax allowance.

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HMRC’s Charity Gift Aid Payments Revealed 
As criticism continues to be levelled at the government in regard to their proposed cap on charity tax relief, HMRC have published figures showing the amount it gave in gift aid payments to charities last year.

The figures, compiled by HMRC’s personal taxes division, were citied by the Exchequer Secretary David Gauke in response to a parliamentary question; and they show that last year, HMRC made gift aid payments to charities totalling £1.075 billion.

In addition, HMRC also paid £360 million back to higher-rate taxpayers in tax relief on charitable donations.

More worryingly for HMRC and the government, the latest figures show that since gift aid replaced covenants at the turn of the millennium, basic-rate tax repayments made to charities have increased by almost sixty percent; whilst higher-rate relief returned to taxpayers has increased by two-hundred and sixty percent.

HMRC’s figures are said to provide real evidence of the scale of the problem the government it attempting to address through its proposed cap on tax reliefs; as they show that the cost of the gift aid system to the Exchequer has been growing steadily year on year, and shows no signs of levelling off on its own.

It is believed that by capping the tax reliefs available and thereby encouraging higher-rate donors to give less, HMRC will not only have to pay out less in higher-rate tax relief to the donor, but also less in basic rate repayments to the charities.

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Think-Tank Call for Purse Strings to be Loosened 
The leading think-tank, the Organisation for Economic Co-Operation and Development (OECD) have suggested that the government should consider borrowing more to pay for vital infrastructure projects, in a bid to stimulate the UK’s economy.

Following last weeks news that the UK had fallen back into recession, the Chancellor, George Osborne said: “The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.”

However, it looks as though, despite previously backing the Chancellor’s austerity plans, the OECD’s opinion differs, with the think-tank saying that George Osborne could let the debt-reduction target slip a year without suffering a backlash in band markets.

The acting head of the OECD’s UK desk, Christophe Andre has said that the UK government could respond to the double dip by “letting the automatic stabilisers play and doing a little more infrastructure investment – partly financed by other measures such as changes to VAT and a bit more borrowing.”

Mr Andre also said: “I don’t think the markets would react adversely if the deficit kept on track on a cyclically-adjusted basis but debt came down a year later than planned” adding that he was talking about something small, up to about half a percent of GDP, which would equate to about £7.5 billion more borrowing.

The latest comments from the OECD is not the first time that the think-tank has suggested the Chancellor loosen the purse-strings; with similar calls coming in May last year.

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Former Cabinet Minister Calls For Tax Cuts 
A leading Tory MP, John Redwood, has called for the Chancellor, George Osborne, to slash taxes to help drag Britain out of recession.

The former Cabinet minister has called for “Gordon Brown” levels of income and capital gains tax to similar levels; following the release of data earlier this week which suggested that the UK was in its first double-dip recession since the 1970s.

Despite the Chancellor cutting the top rate of income tax from fifty-pence during the recent budget, along with introducing faster reductions in corporation tax, Mr Redwood has claimed that George Osborne “should go back to Gordon Brown’s tax rates” adding “he got the tax rates right that we need for an enterprise economy.

“He should cut the top rate of income tax back to 40p and capital gains tax to 20p, to go alongside his corporation tax reforms.”

Former cabinet minister, Mr Redwood also added that lowering taxes would enable the Treasury to collect more revenues because Britain was more competitive; whilst the Labour party have also called on the Chancellor to come up with an economic “plan B”, with Ed Miliband claiming the austerity plan to “cut as far and fast as you can” had failed and urged Britain to take a lead from Barack Obama’s America.

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Optimist Manufacturing Data At Odds With Double-Dip Recession 
According to the most recent CBI survey, manufacturing output showed modest growth in the first three months of the year, amid a general feeling of optimism, which is somewhat at odds with data from the Office for National Statistics (ONS) which indicated yesterday that the UK was back in recession.

Ian McCafferty, the CBI’s chief economic adviser, said that optimism was at its highest for two years, although remaining fragile, saying: "Given Europe is still our biggest export market, the outlook for UK manufacturing will remain uncertain until the eurozone crisis is resolved."

And he expressed surprise at the figures from the ONS, which showed a 0.1 per cent contraction in manufacturing output, saying that the CBI survey had pointed to a 0.1 per cent rise.

Other economists were equally surprised at the ONS data. The Bank of England found the figures “perplexing” and Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club said: “Our reaction is one of disbelief.”

ONS chief economist Joe Grice defended the data, saying at a news conference yesterday: "We have no reason to suspect that these figures are any less reliable than would usually be the case."

"We have a very large set of respondents to base our results on - 40,000 for the economy as a whole," he said. "We go through our returns carefully, we go back to respondents and if anything looks odd, we question it, sometimes several times."

However, economists point to a 0.6 per cent discrepancy in their fgures in 2009, with Chris Williamson of Markit saying: "As was the case three years ago, there is a worry that by heralding a double-dip recession, misleading, gloomy official data shatter the revival of consumer and business confidence.”

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