Higher Rate Tax Bracket Changed

The Chancellor of the Exchequer, Jeremy Hunt, has announced in his Autumn Statement today, 17th November 2022 (otherwise known as the autumn budget) that the higher rate tax bracket would change – that is, the level at which people start paying the top rate of 45% tax will change to £125,140.

This change will come into effect from April 2023 so from the next tax year.

The current level is set at £150,000 and that was due to be frozen until 2026 this budget changed the level and froze it until 2028.

Other tax allowance levels, i.e. the level for 20% tax and 40% tax have been frozen until 2028 (previously this was also planned to be 2026).

Therefore, many more people will be pulled into the 45% tax bracket with effect from next year, to claw back some income to plug the fiscal gap which has been created recently.

The figure of £125,140 is significant as it is the level at which you no longer get any personal allowance, due to the tapering off of this after earnings reach £100,000.

The rates of income tax remain the same, with the lower rate being 20% and the higher rate being 40%. The top rate of 45% was initially going to be scrapped in Liz Truss’s fateful budget but that was scrapped and reinstated.