Budget 2010: Change to personal tax allowance

It was announced in today’s Budget that the personal allowance for under 65s will be increased by £1,000 to £7,475 in the 2011-12 tax year.

The personal allowance is the amount at which no income tax is payable.

As a result, the government estimates that the 880,000 lowest income taxpayers will be removed from paying income tax altogether, and 23 million taxpayers will benefit by up to £170 per year.

The Conservative/Liberal Democrat coalition government has the objective of raising the personal allowance to £10,000.

Sign up to our newsletters

Receive news and guidance on a range of HR issues direct to your inbox

Email(Required)

OptOut

From time to time, we will send you emails about selected products, events and services from Employee Benefits – but you can choose to opt-out at any time. If you do not wish to receive these emails, please tick this box.

Name

This field is for validation purposes and should be left unchanged.

Δ

Richard Mannion of Smith & Williamson, the accountancy and financial services group said: “An increase of £1,000 in the basic personal allowance from 6/4/2011 will be good news for millions but will do nothing for those with higher incomes who have already lost their personal allowances. The freezing of the higher rate threshold will drag more people into the higher rate net (the action of ‘fiscal drag’).”

Read more on tax and legislation