Last week, Jeremy Hunt announced upcoming changes to income tax, most notably a reduction of the threshold at which people are required to pay the additional income tax.
When Chancellor Jeremy Hunt delivered his long-anticipated Autumn Statement to MPs in the House of Commons, he began by outlining his changes to income tax, which are hoped to help stabilise the economy.
The arguably most significant update was the decision that from the 6th of April, the additional income tax rate threshold will be reduced from £150,000 to £125,140. This will mean that anyone earning over £125,140 will be required to pay 45% income tax, rather than 40%. This emphasises the complete U-turn made on Kwasi Kwarteng’s Mini Budget plan to abolish the 45p tax, instead pulling 250,000 more people into the additional rate tax bracket.
Alongside this, Hunt also extended the four-year freeze that Rishi Sunak had initially placed on the income tax basic and higher rate threshold, for a further two years. This means that the two rates will remain at £12,570 and £50,270, respectively, until 2028.
There had also been plans to decrease the basic rate of income tax from 20% to 19% from April 2023, but Hunt announced that this will now only happen when the UK’s economic conditions allow doing so.
If you have any questions about how these changes may affect your business, get in touch with Chris Barlow:
+44 (0) 1 942 816 512
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