As we commence the new 2023/24 tax year, several adjustments to personal taxes are being implemented.

Whilst the majority of personal tax rates will remain frozen until 2028, with the basic rate and higher rate thresholds staying at £12,570 and £50,271 respectively, a more substantial change is in store for higher earners.

Since 6 April 2023, the additional rate threshold has been lowered from £150,000 to £125,140. As a result, a greater number of individuals will be subject to the highest 45p tax rate more quickly.

This alteration will have a significant impact on numerous higher earners, as the income level at which an individual will not have any personal allowance remains constant. For every £2 of income above £100,000, £1 of the personal allowance will be withdrawn.

According to HMRC, this change in the threshold will lead to an additional 232,000 taxpayers being included in the additional rate tax for the first time – those with income between £125,140 and £150,000 could lose up to £1,243 in additional tax.

At first glance, the group of people affected by these changes might seem small. However, when considering rapidly rising salaries due to inflation in recent years, it becomes clear that not only will more people be drawn into the top tax rate, but the freeze will also push others into higher marginal tax bands.

In light of these alterations to the additional rate, and the lack of change to the basic and higher