As expected, Chancellor George Osborne announced increases in the personal tax-free allowance in today’s Budget, including the first above-inflation increase of the higher rate threshold for seven years and a long-term commitment to raising the threshold to £50,000
Osborne said that the current £10,600 personal allowance is to increase to £10,800 next year and to £11,000 the year after. He said Treasury estimates suggest this will mean basic rate taxpayers are £900 better off, with 27m people benefiting.
The higher rate personal allowance, which currently starts at £42,385, will go up to £43,300 by 2017/18.
'It's a tax cut for 27m people and means we've taken almost 4m of the lowest paid out of income tax altogether', said Osborne.
He also committed to raising the higher rate threshold to £50,000 as earlier announced at the last Tory party conference.
'This is a downpayment on our commitment to raise the personal allowance to £12,500 and raise the higher rate threshold to £50,000.'
In addition, the newly announced married couples allowance, which comes into force next month, is to rise to £1,100.
From 2016 to 2017, there will be one Income Tax personal allowance regardless of an individual’s date of birth.
| £ | Personal allowance | Basic Rate Limit | Higher Rate Threshold |
| 2010-11 | 6,475 | 37,400 | 43,875 |
| 2011-12 | 7,475 | 35,000 | 42,475 |
| 2012-13 | 8,105 | 34,370 | 42,475 |
| 2013-14 | 9,440 | 32,010 | 41,450 |
| 2014-15 | 10,000 | 31,865 | 41,865 |
| 2015-16 | 10,600 | 31,785 | 42,385 |
| 2016-17 | 10,800 | 31,900 | 42,700 |
| 2017-18 | 11,000 | 32,300 | 43,300 |
The Technical Information Note on Income tax: personal allowance and basic rate limit for 2016-17 and 2017-18 is available here
