Income Tax Changes Bring Wage Boost for Workers; PAY ECONOMICS
The rate at which workers' take-home pay is increasing hit an 18 month high during April due to changes to the income tax system, figures showed yesterday.
People's post-tax income rose by an average of 4.2 per cent in the year to the end of April, the highest level since September 2006, and well up on March's rise of 3.6 per cent, according to payments group VocaLink.
The group, which processes 90 per cent of UK salaries, said the improvement was driven by controversial changes to the income tax system announced in Gordon Brown's final Budget.
Under the changes the basic rate of income tax has been cut from 22 per cent to 20 per cent, while the 10 per cent starting rate had been abolished - the Prime Minister is now trying to find ways of handing the money back.
The move, which sparked a backbench rebellion and has been widely credited for Labour's poor results in the recent local elections, penalised those on low incomes, while leaving higher earners up to pounds 377 a year better off. …