Tax benefit for those who have kept jobs in recession

Those who have kept their jobs during the financial crisis have seen their pay rise by two thirds more than the amount of tax they pay.

Accountancy firm UHY Hacker Young reported that the average amount of annual income tax collected from British taxpayers increased by 7% between 2007 and 2010 whilst the average income rose by 11% from £25,500 to £28,400 per annum.

A spokesperson from the firm said that for the vast majority of taxpayers the effective tax rate had fallen during the financial crisis.  However, he also pointed out that the figures did not take into account the rate of VAT and other indirect taxes which were still rising.

Income tax levels have been slow to rise because of the increase in the individual personal allowance. 

Between 2007 and 2010 the basic personal allowance rose from £5,035 to £6,475.  For pensioners it increased from £7,280 to £9,490 whilst the basic rate of tax fell from 22 to 20% over the same period.

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