Budget: High income earners targeted by tax grab Chancellor announces a double blow to high flyers with 50 per cent income tax and personal allowance cuts by jhon o

Around 700,000 high earners will be hundreds of pounds worse off because of a hike in income tax to be introduced in April next year.

In a surprise move the Chancellor announced a change to the personal allowance which will mean that anyone earning over £112,950 will be around £3,000 worse off from April 2010.

In another blow to top earners, he announced that those earning over £150,000 will be taxed at 50 per cent from next April.

The change in the personal allowance alters a plan announced in November's pre-Budget report. At the time Alistair Darling said that taxpayers will suffer a reduction to their personal income tax allowance by £1 for every £2 of earnings above £100,000, up to a maximum of half the personal allowance. People earning more than £140,000 would suffer a further cut in the personal allowance until it was removed completely at £146,500.

In today's speech the Chancellor announced that the plan to take away the personal allowance will be simplified. The personal allowance will disappear at £1 for every £2 of earnings, with no floor.

That means the personal allowance will disappear completely for anyone earning £112,950 or over. Therefore, if the standard personal allowance in 2010 is £6,505 this will cost someone earning £113,000 a total of £2,602.

Together, the measures mean that someone earning £200,000 will be around £8,000 worse off.

Toby Ryland partner at Blick Rothenberg, the accountant, said:"Individuals earning over £100,000 will see significant income tax increases either through withdrawal of their tax free personal allowance or, for those earning, over £150,000 a 10 per cent increase in their income tax rate. It is not just the fat cats who will suffer, it is people like GP's and headteachers."