Budget 2015: Personal allowance to rise again

Published by Laura Whitcombe on 18 March 2015.
Last updated on 18 March 2015

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.

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