The personal allowance will rise by £500 to £11,500 in its seventh year of continued growth and the higher rate threshold will increase by £2,000 to £45,000.

Over the previous seven years the personal allowance has grown by £5,025 from £6,475 in 2010-11 to £11,500 in 2017-18.

By raising the personal allowance it means that the amount someone can earn tax free in 2017-18 will be over 75% higher than it was in 2010. Raising it to £11,500 alongside a £2,000 increase to the higher rate threshold will cut income tax for 31 million taxpayers as well as 1.3 million not having to pay income tax at all.

The increase in personal allowance will cost government £1.7bn in 2017-18, increasing to £1.95bn in 2018-19 and then subsequently showing a slight drop to £19.4bn in 2019-20.

The increase of the higher rate threshold will cost the government £1.6bn over the next three years. 

Iain McCluskey, tax partner at PwC, said: 'The personal allowance and basic rate band continue their journey to the election manifesto targets of 12,500 and 50,000 respectively, with previously announced rises confirmed. 

'Whilst a rising personal allowance means that most taxpayers earning less than £100,000 will pay less tax, it does not help those workers - like part-time employees - already earning less than the current personal allowance. And with national insurance clearly a favourite revenue raiser, there seems no short-term hope of the lower earnings limit for national insurance rising to match the personal allowance any time soon.'

Hammond's plans to increase the personal allowance and higher rate threshold come as part of his strategy to ensure a fair and sustainable tax system by also reducing corporation tax to 17% by 2020 and continue to tackle tax evasion.