As the new 2023/24 tax year begins, there are a number of personal tax changes taking place.

Whilst most of the personal tax rates remain frozen until 2028, with the base rate and higher rate thresholds remaining at £12,570 and £50,271 respectively, there is a more significant change for higher earners.

As of 6 April 2023, the additional rate threshold has dropped from £150,000 to £125,140. As a result of this, more people will pay the highest 45p rate of tax sooner.

This will have a significant effect on many higher earners as the income level at which an individual will not have any personal allowance remains unchanged.

This means that £1 of the personal allowance is withdrawn for every £2 of income above £100,000.

According to HMRC this change in the threshold will result in an additional 232,000 taxpayers drawn into additional rate tax for the first time – with those who have income between £125,140 and £150,000 losing an additional £621 to tax.

At first, the pool of people affected by these changes seems small. However, when you consider rapidly rising rates of salary as a result of inflation in recent years, then it is easy to not only see how more people will be drawn into the top rate of tax but also how the freeze will cause others to enter new marginal tax bands.

Given these changes or lack of change in the case of freezes to the basic and higher rate of tax, it is more important than ever to seek tax planning advice.

We can offer advice on this and many other personal tax planning matters. To find out more, please contact your Seymour Taylor representative today or email or call 01494 552100.

This blog is for guidance only, professional advice should be obtained before acting on any information contained herein. The information was correct at the time of publishing 25 April 2023.


Posted in Blog news.