Basic rate reduced from 6 April 2023 – from 20% to 19%

– This was due to start from 6 April 2024 and has been brought forward by one year, now effective from 6 April 2023.

– There will be a four-year transition period for Gift Aid relief to maintain the Income Tax basic rate relief at 20% until April 2027. This will support almost 70,000 charities and is worth over £300m to those charities.

– The basic rate cut only applies to taxpayers in England, Wales and Northern Ireland. It remains to be seen if the Scottish Government will reduce the basic rate of tax in Scotland.

45% Additional Rate of Income Tax abolished

– The government is also removing the additional 45% rate of Income Tax on annual income above £150,000 from 6 April 2023.

– This means that all annual income above £50,270 will be taxed at 40%, the current higher rate of Income Tax.

– The government states that this will cut tax for around 660,000 individuals from April 2023.

Personal Savings Allowance

– This will become available to those taxpayers who would have otherwise been additional rate taxpayers from April 2023. They will benefit from a Personal Savings Allowance of £500, in line with higher rate taxpayers.

Dividend tax rates

The rates of dividend tax are reduced with effect from 6 April 2023

– For basic rate taxpayers the rate will reduce from 8.75% to 7.5%

– For those previously paying the higher rates of 33.75% and 39.35%, the rate will reduce to 32.5%