UK tightens income tax rules as part of budget squeeze

The British government announced on Thursday plans to freeze income tax allowances and lower the threshold at which people start to pay the highest rate of income tax, in order to stabilise the public finances. Finance minister Jeremy Hunt said he would freeze income tax allowances until 2028 and was lowering the threshold above which the 45% top rate of income tax is paid to 125,140 pounds ($148,053) from 150,000 pounds. “Even after that, we will still have the most generous set of tax-free allowances of any G7 country,” Hunt told parliament in a speech on the public finances aimed at restoring market confidence in the government’s finances after the 50-day premiership of Liz Truss. Her government had said it would abolish the top rate of income tax, before reversing course amid financial turmoil triggered by her plans. She was forced to resign last month and was replaced by Rishi Sunak as prime minister.