Additional rate threshold to fall
The additional rate threshold is to fall from £150,000 to £124,140 from 6 April 2023. The personal allowance and basic rate band will remain unchanged, at respectively, £12,570 and £37,700, until 6 April 2028. The tax rates are also unchanged for 2023/24, remaining at 20%, 40% and 45%.
The reduction in the additional rate threshold will increase the tax payable by those with income in excess of £150,000 by £1,243.
Where income in 2023/24 is likely to be between £125,140 and £150,000, consideration should be given to whether it is possible to advance income so that it is taxed in 2022/23 at 40% rather than in 2023/24 at 45%.
We can explain what the reduction in the additional rate threshold means for you and discuss whether it is beneficial to make pension contributions or charitable donations.