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The promised hike in the personal allowance to £10,000 is confirmed for the tax year 2014/15.

The basic rate limit is £31,865 for 2014/15. This means that 40% taxpayers (if taxable income does not exceed £100,000) will partly benefit from the increase in personal allowance.

The 45% band for 2014/15 applies to taxable income over £150,000.

As is well known, there is a nasty tax trap by reference to the gradual withdrawal of the personal allowance if taxable income exceeds £100,000.This is via a reduction of £1 of allowance for every £2 of excess taxable income. For 2014/15 the trap is even wider than before with the increase in personal allowance to £10,000:

Taxable income Marginal rate
£100,000 to £120,000 60%
£120,001 to £149,999 40%
£150,000 + 45%

If your taxable income is ordinarily in the 60% marginal band we can advise on possible solutions.