The cut to the additional rate tax threshold to £125,140 will mean an increased income tax liability of up to £1,243, says Nimesh Shah, CEO at leading tax and advisory firm, Blick Rothenberg.
He added, “However, the impact of the threshold cut is not as severe when compared to the current tax year, because of the 1.25% reduction to National Insurance confirmed in the Mini Budget.
“A worker earning £200,000 will still be better-off in 2023/24 by over £200 because of the savings generated through the reversal of the 1.25% NIC increase.
“The additional rate tax threshold cut is expected to impact around 250,000 taxpayers, and more people will continue to get dragged into 45% income tax.
“The additional rate tax threshold has been frozen at £150,000 since its introduction in 2010; had it increased in line with inflation, it should be worth over £206,000 – today’s reduction to that threshold to £125,145 means it is short by £81,000 in real terms.”