Back in 2021, Chancellor Sunak announced in his budget that income tax personal allowance and the higher rate threshold would remain frozen for four years – from 2022/23 until 2025/26.
As previously announced, the Income-tax increased to £12,570 for 2021/22 and has remained frozen.
According to IFS analysis, £20.5bn will be collected in tax rather than £8bn Sunak predicted in March 2021. The freeze in income tax and rising inflation indicate that the treasury will collect £13bn more than predicted. Income tax thresholds usually rise along with inflation, yet they were frozen when inflation was 1.6%. With inflation expected to rise to 8%, more people are expected to begin paying taxes or pay a higher tax rate.
These are the income tax rates and bands according to the Gov.UK website.
|Band||Taxable Income||Tax Rate|
|Personal Allowance||Up to £12,570||0%|
|Basic Rate||£12,570 to £50,270||20%|
|Higher Rate||£50,270 to £150,000||40%|
|Additional Rate||Over £150,000||45%|
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