HIGHER rate taxpayers will not feel the full benefit of the increased income tax threshold because they will pay the 40p level even earlier, George Osborne said.
From April 2014 the threshold will rise to £10,000, up from £9,440 next month and £8,105 now.
But the size of the standard rate bracket has been dragged down – only the next £31,865 will be taxed at 20 per cent from April 2014, down from £32,010 from April 2013 and £34,370 in the current tax year.
The combination of changes means taxpayers in the 40p band will still be £195 a year better off, but the chancellor is more eager to help lower earners than higher earners.
Those on £120,000 or more will not benefit at all. The top rate of tax on pay over £150,000 is already being cut from 50p to 45p from April.