HIGHER-RATE taxpayers will be £195 a year better off after the 40% threshold was raised for 2014-15 by 1% to £41,865, alongside the higher £10,000 personal allowance.

It will rise by a further 1% the following year to £42,285. The failure to keep up with inflation, however, means the threshold will be £5560 lower in 2015-16 than if it had risen with inflation since 2010, according to the Institute of Fiscal Studies. The ending of the higher tax allowance for over-65s will mean "a sneaky kick in the teeth for those of us born between March 1938 and March 1948", one Herald reader has claimed.

The over-65s already have the £10,500 personal tax allowance, which everyone else will get from 2015-16, which means the disappearance of a £212 differential.

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