Deloitte comments on abolition of additional rate income tax and acceleration of 19% basic rate

Rachel McEleney, associate tax director at Deloitte, said:

“The Chancellor has announced today that the basic rate of income tax cut from 20% to 19% will now be effective from 6 April 2023; a year earlier than when it was proposed in March’s Spring Statement. This should save most higher rate taxpayers £377 in 2023/24 compared to 2022/23, with basic rate taxpayers also seeing some savings, albeit less. 

“The Chancellor also announced that he will abolish the 45% additional rate of tax from 6 April 2023, with a 40% rate tax applying to incomes above £150,000. The policy reverses the additional rate which was first introduced in April 2010. For an individual with employment income of £200,000 and who does not live in Scotland, this means they should see a reduction in their income tax bill from £74,960 in 2022/23 to £72,083 in 2023/24, a tax saving of £2,877. Similarly, the dividend additional rate will also be cut from 39.35% to 32.5%. 

“Taxpayers living in Scotland are subject to Scottish rates on their non-savings non-dividend income. These are set by the Scottish Parliament and are currently up to 46%. Unless Scotland chooses to follow in Westminster’s footsteps on tax cuts, someone earning £200,000 in Scotland should expect to pay income tax of about £78,129; more than £6,000 above the level for the rest of the UK. The reduced rates will apply to their savings and dividend income, however.”

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Deloitte spokespeople

Deloitte has a range of spokespeople available to comment on today’s Budget. They can be reached on 020 7007 3333 or 0207 303 5054 or one of the following numbers:

• Amanda Tickel - Head of tax policy (07920 270 964)

• Rachel McEleney - Personal tax (07826 891 752)

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