In line with coalition aim to increase the personal tax allowance to £10,000 the chancellor confirmed that from April 2013, the personal allowance is set to rise to £9,440, an increase of £235.For 2014-15 and 2015-16 the increase in the higher rate threshold will be capped at 1%. The threshold for paying the 40% rate will rise by 1% in 2014 and 2015 from £41,450 to £41,865 and then to £42,285.

This will benefit an estimated 24.4m individuals and lift an additional 250,000 people out of income tax altogether.

'This is the first cash increase in this parliament,' said Osborne.

He also hinted that there would be no return to a 50p tax rate, saying that 'punitive tax rates do nothing as HMRC data revealed' and that high tax rates on the rich were 'a tax con', pointing to the reduced tax receipts following the introduction of the top rate in 2009/10.On the underlying rates of NICs for 2013/14 there are no changes to the percentage rate of contribution for Class 1 and Class 4 National Insurance contributions (NICs) but there are changes to all the thresholds and limits.The capital gains annual exempt amount will increase by 1% each year overthe same period to £11,000 in 2014-15 and £11,100 in 2015-16; and the inheritance tax nil-rate band, which has been frozen since 2009 at £325,000, will increase by 1% in 2015-16 to £329,000.

The plan to introduce universal credit is still on schedule, Osborne confirmed.

Child tax benefits and working tax credits are set to rise by 1% for next three years.