More people paying top rate tax

Record numbers of people will pay higher rate tax this year according to latest estimates from the Inland Revenue. And a new report has found that, despite the stock market downturn, the number of millionaires in the UK increased during 2001.

The World Wealth Report 2002, published this week by Merrill Lynch and Cap Gemini Ernst & Young, reckons there are now 345,000 ‘high net worth individuals’, with financial assets of more than $1 million, in the UK. Real estate is not included in these calculations.

Meanwhile, the Inland Revenue is expecting up to 2.8 million people to pay income tax at 40 per cent in the current tax year. This is a third more than in 1997 when Gordon Brown became Chancellor. Failure to raise the basic rate tax threshold in line with earnings is blamed for this dramatic rise.

Overall 28.3 million in all are expected to pay income tax at the basic or starting rate. This is another record.

The World Wealth Report reckons that the wealth of all the world’s 7.1 million high net worth individuals increased by about 3 per cent in the last calendar year. Michael Marks, chairman of Merrill Lynch Investment Managers, said the rise was the slowest since the report was first published in 1997.

Nevertheless, this growth was achieved in a year when the world’s major stock markets experienced a 13 per cent drop in value.

Going forward Merrill Lynch is predicting that the assets of the wealthy will grow by 8 per cent a year on average for the next five years, reflecting an envisioned recovery in stock markets.