Personal tax allowance to rise to £10,600

The government will increase the income tax personal allowance to £10,600 from April 2015.

This is higher than the previous planned increase of £10,500 announced in the Queen’s Speech in June.

It means the first £10,600 of an employee’s annual salary will be exempt from income tax.

Anna McCaffrey, senior associate in the employment practice at international law firm Taylor Wessing, said: “All employees will also benefit to a small extent from the increase to the tax-free personal allowance for income tax and higher earners will benefit to the increase to the income threshold for the 40% income tax rate.”