HMRC has published its annual statistics on the distribution by industry of tax deducted by employees’ pay cheques each year.
According to the findings, bankers and insurance brokers are shouldering a bigger income tax burden than ever, paying the Revenue the greatest amount of tax than any other industry.
The finance and insurance industry made up 17.1 per cent of the total amount HMRC collected in the 2016-17 tax year, a record high and a 0.5 percentage point increase on the amount of tax taken in 2015-16.
The tax liability of the booming “Stem” field – science, technology, engineering, and mathematics – is the second highest, making up 12.2 per cent of the Revenue’s income tax pot. The amount of tax paid by this sector has increased by a fifth over the past five years, making it the fastest growing contributor of income tax.
Those in higher paid fields such as banking and technology pay more of their salary, because many pay the 40 per cent tax rate applied on incomes above £46,351.
With your pay rise comes some unwanted tax changes. The amount of tax-free savings income you can earn is cut in half. The tax you pay on your dividends will also rise once you hit the higher rate threshold.
But there are ways to mitigate the loss of tax reliefs when a pay rise pushes you into the higher tax bracket. Options to reduce the losses include making full use of Isas, utilising salary sacrifice and increasing pension contributions.
Our tax experts at Beavis Morgan are committed to ensuring that your tax reporting obligations are fully satisfied and that every opportunity to lawfully exploit tax savings is made known to you, restructuring your affairs in a tax effective and efficient way.
What’s more, with the sharp rise in inheritance tax receipts, which have increased by 120 per cent to £5.23 billion in eight years, our Beavis Morgan tax experts are available to guide you and advise you on how best to mitigate IHT, through forward planning and utilising the strategies available to you.
For more information, and to make sure you don’t pay more tax than you legally need to, contact your usual Beavis Morgan Partner.