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.
This is a nice headline catching piece of news and a sop to the Liberals but in reality it is no more than an average of £0.10p an hour for the average worker, welcome but unlikely to offset the additional 2.5% VAT which kicks in in January 2011 ahead of the tax cut.
Author: Chris Slay
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