Page 5 - Budget Newsletter November 2022

number of additional rate taxpayers has surged from 236,000 in 2010/11 to 629,000 in
2021/22.

In pursuit of the broadest shoulders on which to levy extra tax, Mr Hunt has reduced the

additional rate threshold for 2023/24 onwards to £125,140. The figure is set at £140 more
than the pre-Statement rumours to avoid creating a £140 band in which both the personal
allowance taper and additional rate tax operated. As a result, the maximum marginal
income tax rate in the personal allowance taper band between £100,000 and £125,140
remains at 60%.

Dividend tax

The dividend allowance will be halved to £1,000 in 2023/24 and halved again in 2024/25 to
just £500 – one tenth of its original level in 2016/17.

Previous announcements remaining in force

The list, which dates back as far as the time when Mr Sunak was Chancellor, includes:

• A four-year freeze on the personal allowance (£12,570) and higher rate threshold
(£50,270 outside Scotland) until 5 April 2026. This is already biting significantly more
than was originally forecast because of soaring inflation. Had CPI indexation
continued to apply, in the coming tax year the personal allowance would be £14,280
(+£1,710) and the higher rate threshold £57,180 (+£6,910).
• Basic rate tax (outside Scotland) will remain at 20% ‘indefinitely’.
• Dividend tax will remain at the rates introduced in 2022/23 of 8.75%
(basic/ordinary), 33.75% (higher/upper) and 39.35% (additional), despite the

abolition of the Health and Social Care Levy.

Planning point
The combination of high inflation and frozen allowances and tax bands makes
independent tax planning increasingly important for married couples and civil

partners. Rearranging who holds which income-producing investments could save
both of you tax.

Raymond James Budget Newsletter November 2022 4