How the UK’s new top rate rises could make you more money

The UK government will be introducing a new rate of income tax this year that will make you £1,000 better off.

It is one of the biggest tax cuts in decades, which will give households in the north of England and Wales £3,400 more than they were entitled to under the current rate of tax.

The change is set to take effect from April.

The headline rate of the new rate is 45%, which means it will increase from £2,750 to £3 in 2020-21, from £3.50 to £4 in 2021-22 and from £5.00 to £6 in 2022-23.

It will be replaced by a new 20% rate, which is the rate that applies to all income above £110,000.

The biggest winners will be the richest households in England and Scotland, with their income growing by £1.2m in 2020. 

The average household income for households in each of these areas will increase by £6,700 from £72,000 to £83,000, while the median income for families will increase £1 per week from £58,000 in 2020 to £68,000 this year. 

But the biggest winners from this year’s tax cut will be those in the Midlands, where incomes will rise by £2.2 million.

The Midlands will be able to enjoy a £1 a week tax cut, which the government says will help to make their region the best place to live for the second time in a decade.

The new rates mean that the average UK household will be £5,200 better off, compared with a previous year.

The most vulnerable, the elderly and children, will see their incomes rise by only £1 or so. 

What will it mean for the economy? 

The UK’s economy will likely continue to grow in 2020, although it will be hit hard by the introduction of the rate.

The country’s economy shrank in the fourth quarter of last year, the biggest fall since 2011.

But it has since rebounded strongly, with the government forecasting the GDP in 2020 of £1 trillion, up by £100 billion from last year.

A strong economy will mean more tax revenues for the government. 

Will the tax cut last? 

It is likely to take longer than expected to come into effect, with a number of major issues that have hindered the government’s plans to make the tax system fairer.

The UK’s current system of indirect tax is based on the principle that those earning more than £80,000 earn the full rate of taxation, which includes the rate of national insurance, VAT and other tax.

These are known as top rates. 

Under the new rates, these individuals will be taxed at a lower rate of 30%.

The new tax will apply to income over £110k, which currently pays 25% of the tax rate, but will increase to 45% in 2020 and to 50% in 2021. 

How will the government spend the new money? 

After the new tax is implemented, the government will spend up to £20 billion on tax cuts over a 10-year period, although some of the money will not be spent on new spending.

These include the NHS, pensions and welfare.

The government will also be able buy back the bonds that have been sold off to pay down the debt. 

Is the money from the tax cuts sufficient to pay for the debt? 


The debt will be paid off over the next 10 years.

If the government were to continue with the current policy of borrowing for the NHS and welfare, the debt would rise to £130 billion by 2023-24, according to the Office for Budget Responsibility.

The Treasury says that the £100bn of debt paid down by 2020 will be enough to pay off the debt for five years. 

Can you use the money to invest? 

In theory, yes.

The £100billion could be used to boost investment in the economy, including infrastructure, housing, transport and education.

But critics say the government could end up making the debt worse, as businesses take on more debt to pay back loans, which could in turn make them pay higher interest rates on those debts. 

So, will the new government pay down debt before 2020? 

According to the Treasury, the amount of money raised by the tax hike will not exceed £1 billion.

However, it is not clear how the money raised will be used.

The chancellor has said that he wants to use the extra cash to reduce the national debt, but critics say this will not happen unless the government actually reduces the debt, rather than just paying off debt that is owed. 

Who is benefiting from the new taxes? 

 The wealthiest households will see the biggest increases, with household incomes growing by around £1m in the first two years.

In contrast, the poorest households will likely see their average income decline by around 20%. 

How long will it last?

 The new rate takes

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