Commenting on the changes to the higher tax rate threshold announced in today’s budget, Jo Bateson, Private Client Tax Partner at KPMG in the UK, said:
“The Chancellor has today announced that the higher rate tax threshold will increase to £43,000 in 2016/17 and £45,000 by April 2017. This is a move which is expected to reduce the tax bill for 28.9m individuals across the UK.
“From April 2017, the higher rate threshold will be £45,000 and HMRC expect this will give an average tax saving of £56 to a basic rate taxpayer and £233 saving to a higher rate taxpayer. At the same time, the Chancellor has announced that the tax-free personal allowance will be increase to £11,500 by 2017/2018 which should be seen as another tax break.
“The increase in the band and personal allowance are expected to cost the Chancellor approximately £9.7bn by 2021 and is a reward to those people in work. However, it will be interesting to see how the Chancellor keeps workers onside nearing the end of Parliament, given they have introduced these measures so early in their government.
“Furthermore, with such a giveaway, large revenues will need to be raised from other measures to balance the books.”
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