Budget 2025: Income Tax and rate bands explained

It has been confirmed that the freeze on income tax thresholds will be extended for another two years, taking it through to April 2030.

The personal allowance, higher-rate threshold and additional-rate threshold will remain fixed in cash terms, dragging millions more into paying 20p, 40p and even 45p tax as wages rise.

As a result, the personal allowance before income tax is paid will remain at £12,570 regardless of inflation or wage growth. The higher-rate 40% threshold will be held at £50,270, and the additional-rate threshold for 45% at £125,140.

The number of income taxpayers is expected to rise by almost 1 million - 960,000 - to reach 42.1 million by 2029/30. Significantly, many pensioners will pay tax for the first time as th

See Full Page