In the Autumn Statement Chancellor Jeremy Hunt revealed he would be reducing the threshold on who pays the top rate of taxation.

Mr Hunt has reduced the threshold at which the top rate of income tax is paid from £150,000 to £125,140, which will come into effect from April 2023.

Speaking to the Commons he described it as a “substantial tax increase” but said he was not raising headline rates of taxation, adding tax as a percentage of GDP will increase by 1% over the next five years.

He added that those earning £150,000 or more will pay just over £1,200 more a year

Here's all the information you need to know on the top rate of tax and how it applies.

What is the top rate of tax?

On the Government website, it states that tax rates start after the personal allowance threshold which is £12,570.

If you earn that amount of money or less in a single tax year (lasting from April to April) you won't be taxed at all.

Tax comes in from any money earnt on top of that, so for those earning between  £12,571 to £50,270 in a tax year they pay 20p for every pound earnt over the threshold.

READ MOREJeremy Hunt unveils tax hikes for millions in Autumn Statement

Currently, the top rate of tax is 45p taken off for every pound earnt over the threshold, which only applies to those earning over £150,000.

As a result of the Autumn Statement the 45p top rate will now apply to anyone earning £125,140 or more in a tax year.

Previously that rate was 40p for those earning between £50,271 to £150,000 in a tax year.