It was previously proposed that we would see a basic rate cut in Income Tax* in 2024 by 1p, however in a recent announcement from the Chancellor, we will see this brought forward to April 2023 with Income Tax dropping from 20p to 19p. The Government estimate that around 31 million people will benefit from an extra £170 a year.
The Chancellor had planned to abolish the proposed 45% additional rate of tax, paid by people earning over 150,000 per annum, however after being met with a lot of criticism he has now took a U-Turn and the 45p tax rate for earners over £150,000 will stand.
*Changes to Income Tax do not apply in Scotland
What is Income Tax?
Income Tax is a tax we pay on any wages, salaries, dividends, interest and any other incomes a person earns throughout a year.
What is Income Tax used for?
The Income Tax we pay is used as funding for public services including the NHS, Education and Welfare System and investments for public use like construction, railways and housing.
What Percentage of Income Tax Do We Pay?
The current rates for the financial year (6th April 2022 – 5th April 2023) stand at:
- Up to £12,570 per annum (0%)
- £12,570 – £50,270 per annum (20%)
- £50,271 – £150,000 per annum (40%)
- Over £150,000 per annum (45%)
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