Measure
3 OCTOBER 2022 UPDATE:
At the Conservative Party conference, the Chancellor of the Exchequer Kwasi Kwarteng announced that "we are not proceeding with the abolition of 45p tax rate" which was announced as part of the mini-Budget. He suggested that the abolition had been a “distraction from our overriding mission to tackle the challenges facing our country”. Therefore, non-dividend income over £150,000 will continue to be taxed at 45% from the 2023/24 tax year.
We would expect that the dividend additional rate will be 38.1% from 2022/23 and taxpayers earning in excess of £150,000 will still be unable to benefit from a Personal Savings Allowance of £500. However, these points are yet to be confirmed by the government.
According to the government, the removal of the additional rates of income tax was expected to cost £6.79billion between the 2022/23 and 2026/27 tax years (inclusive).
The measure will affect individuals and trustees who are subject to income tax in the United Kingdom.
Following the cancellation of this measure, there is no change to income tax rates.
The change to this policy reflects the amount of commentary on this measure since it was announced, and the reversal is made in the context of market uncertainty which has followed the mini-Budget.
This change also removes what would have been a significant discrepancy between Scotland (46% top rate) and the rest of the UK (what would have a been a 40% top rate). The Scottish Government will present the results of an Emergency Budget Review to the Scottish Parliament in the week commencing 24 October 2022.
For more information on the Scottish perspective of this measure please see the article on the Scottish commentary.