Pledge to cut Income Tax
The Chancellor ended his speech by announcing a commitment to a 1% cut in the basic rate of Income Tax (currently 20%) in two years’ time which seems to be a bold move in current times as there are still a number of unknowns.
There was no mention of any change to the tax rate for higher or additional rate taxpayers or the bands at which they would apply, which are frozen until April 2024 and so despite the announcement, it still provides leeway to adjust tax bands and thresholds to maintain tax receipts should it be required.
One small point is that as Gift Aid payments to Charities are based on the basic rate of tax and a reduction could directly impact their funding, the Treasury have confirmed a three year transition period, maintaining the tax relief at 20% until April 2027. This provides certainty for the Third Sector, but may also allow for tax planning opportunities for individuals.
If you have any questions for our Tax experts as a result of these announcements, please contact us on 01242 776000 or tax@randall-payne.co.uk.
