An extra two million people could be brought into the higher and top rate tax bands by 2014/15 which will create a raft of financial planning opportunities for advisers.
The personal allowance rises next month from £8,105 to £9,440. In his Budget speech this week, chancellor George Osborne said the personal allowance will increase to £10,000 in April 2014 and then increase with CPI in future years.
As the personal allowance has increased, the 20 per cent basic rate tax threshold has moved down. It will decrease from £34,370 in 2012/13 to £32,010 in 2013/14 and to £31,865 in 2014/15.
Figures from the Office for National Statistics show there were 3.3m higher rate and additional rate taxpayers in 2010/11. Based on these figures and the latest data up to 2012/13, Aviva corporate benefits head of policy John Lawson estimates there will be a total of five million higher rate and additional rate taxpayers by 2014/15.
Lawson says: “This is a good news story for advisers. With the addition of two million higher rate and top rate taxpayers, changes to the personal allowance plus those who are losing child benefit, it means there are an awful lot of people that will need financial planning help, including getting their income below the relevant thresholds.”
Aurora Financial Planning chartered financial planner Aj Somal says: “With more people pushing into higher and top rate tax thresholds, there is definitely an opportunity for advisers to prove their worth and demonstrate the value of financial planning.”