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AS 2014: 40p income tax threshold rises to £42,385

The 40 per cent income tax threshold will increase to £42,385 next year, Chancellor George Osborne has announced in today’s Autumn Statement.

The higher rate threshold is currently set at £41,865.

Osborne said: “That is the first increase in the higher threshold in line with inflation for five years.

“This year’s increase means 138,000 fewer people will pay the higher rate than would otherwise be the case.

“And it is a down-payment on our commitment to raise the higher rate threshold to £50,000 by the end of the decade.”

Osborne also announced the personal tax allowance will increase next year from £10,000 to £10,600, not £10,500 as planned.

He said: “That’s a total wage boost for working people of £825 a year. It means three and a half million of the lowest paid will now be taken out of tax altogether.”

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