The highest rate taxpayers will be facing a tax increase in April when their Income Tax earnings threshold is reduced.
In his autumn statement on 17 November, Chancellor of the Exchequer Jeremy Hunt announced that the 45p additional rate of Income Tax would have its threshold cut. In effect, it means more people will be paying the tax, thus pulling in more money for the Government.
Those earning over £125,140 a year will now also be forced to pay the higher rate. The previous figure was £150,000 per annum.
In addition, those earning above £125,140 are not eligible for any Personal Allowance on taxable income.
HM Revenue & Customs rates of income tax from the new tax year are:
| PAYE tax rate | Rate of tax | Annual earnings the rate applies to (above the PAYE threshold) |
| Basic tax rate | 20 per cent | Up to £37,700 |
| Higher tax rate | 40 per cent | From £37,701 to £125,140 |
| Additional tax rate | 45 per cent | Above £125,140 |
Who pays the additional rate of Income Tax?
The Government says the existing top rate of income tax is paid by around 600,000 people in England, Wales and Northern Ireland – just 1.2 per cent of the working population.
HMRC data shows that 36.1 per cent of England’s highest earners live in London, while a further 24.5 per cent are based in the South East. London is where many of the UK’s biggest businesses are headquartered and is also one of the world’s largest financial centres.
We hope you found this useful. It is the latest in a series of blogs on Income Tax.
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