Another prominent announcement on 17 November was that the Income Tax thresholds will be frozen until 6 April 2028 instead of 2026. Also, the additional rate threshold will be lowered to £125,140 from £150,000.
Income Tax rates for 2023-24
| Taxable Income | Tax Rate |
Personal Allowance | Up to £12,750 | 0% |
Basic Rate | £12,751 to 350,270 | 20% |
Higher Rate | £50,271 to £125,140 | 40% |
Additional Rate | Over £125,140 | 45% |
This will mean that more taxpayers will be moved into higher tax rates over the next couple of years due to this freeze on Income Tax rates and inflation.
Moving into a higher band rate means that your personal savings allowance will be lowered. Taxpayers in the basic rate band currently have a personal savings allowance of £1,000. Then once you move into the higher rate band your personal savings allowance drops to £500. Any taxpayers within the additional rate have no personal savings allowance.