A tax cut for those paying the 40p rate: £42.20
Interesting to note that while announcing his personal allowance tax cut the Chancellor failed to mention that ‘the basic rate limit will be reduced, from £34,370 to £32,245 in 2013-14, so most higher rate taxpayers will get one quarter of the benefit a typical basic rate taxpayer will receive’ (page 29). Firstly, this means that more people (reportedly 300,000) find themselves in the higher rate tax band, something the Chancellor was undertandably not keen to point out. And secondly it means the scale of the benefit from the increased personal allowance for those in the higher rate band is limited. Whether providing 3.7 million people with an extra £40 a year will make a huge difference to our economic prospects remains to be seen.