Budget 2015: Personal allowance to rise again

Money in back pocket

Chancellor of the Exchequer George Osborne has announced a further increase in the personal allowance from £10,600 in 2015-16 to £10,800 in 2016-17.

The personal allowance is the amount of income people are allowed to earn before they have to pay any income tax. Osborne said it will rise once again in 2017-18 to £11,000.

The Treasury said that increases to the personal allowance that took place between 2010 (when it was £6,475) and 2017-18, will have saved the typical taxpayer £905.

In total, 27 million people will benefit from increases in the personal allowance, with 4 million of the lowest-paid being taken out of income tax altogether.

To make sure the full benefits of the personal allowance increase are passed on to higher-rate taxpayers, George Osborne said he will increase the point at which higher earners start paying 40% tax.

It will increase by £315 in 2016/17, and by £600 in 2017/18 taking it to £43,300 in 2017/18.

More about