Autumn Statement 2014: Personal allowance upped to £10,600

Money in back pocket

The amount of money you are allowed to earn tax free will rise to £10,600 in April, £600 more than the current amount and £100 more than was initially planned.

Osborne added that he hoped he would be able to raise the threshold further to £12,500 by 2020.

The Chancellor said the change would save people £825 a year. Chief secretary to the Treasury, Danny Alexander, clarified this point and explained that the amount was the total benefit of all the increases in the personal allowance the coalition has made since 2010.

The level of earnings at which the higher-rate income tax of 40% kicks in will also rise in April to £42,385 from £41,865.

Kevin Mountford, head of banking at MoneySuperMarket, said: "With the economy clearly improving, today’s Autumn Statement shows the Chancellor trying to give money back to UK households by announcing some surprise giveaways. The first changes in the higher-rate tax threshold for five years, from £41,865 this year to £42,385 next year is definitely a step in the right direction."

Your Comments

The personal allowance (pa) increase sounds a lot but in reality the additional income it delivers does not come anywhere near the rate of inflation for most people. If your gross income is below the pa you do not benefit at all. Basic rate tax payers will be up to £120 better off and Higher rate payers up to £328 better off compared to 2014/15 tax year, but for Basic rate payers the increase equates to 0.29% to 1.13% extra in their pocket (0.48% for someone on £25K), when CPI is currently around 1.3%.

Well, at last, my income tax burden which has increased by £110 plus inflation over the past four years has reduced by some £50 a year. So what will I do with the whole £10 I get? No idea, but at least he has finally given me a mite!

does this increase include pensioners allowance which was frozen

does this increase include pensioners allowance which was frozen

Everyone born after 5/4/1938 will get the new £10600 allowance from 6/4/2015.  Those born before 6/4/1938 will retain the higher allowance of £10660 - unless your total income exceeds £27K when the allowance is reduced by £1 for every £2 over £27K until the aditional £60 is wiped out. i.e those on £27120 or higher will get a pa of £10600.