The Ying & Yang of Income Tax Allowances

21 Mar

Hundreds of thousands of basic rate taxpayers will fall into the 40% income tax bracket when the government lowers the threshold next year.

The Budget small print shows the higher rate threshold will be reduced by £1,025, from £42,475 to £41,450, from April next year, capturing, experts suggest, as many as 300,000 extra people.

 The Good News

  • the top rate of tax will be cut to 45% from April 2013
  • the personal allowance will increase to £9,205

The Bad News

  • basic rate threshold will reduce to £32,245


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