Income tax threshold raised to £11,000

Osborne said:

"We believe that work should pay – and families should keep more of the money they earn.

"When we came to office, the personal tax-free allowance stood at just £6,500. We set ourselves the goal – even in difficult times – of raising that allowance to £10,000 by the end of the parliament

"We have more than delivered on that promise. In two weeks’ time it will reach £10,600

"That’s a huge boost to the incomes of working people and one of the reasons we have a record number of people in work.

"Today I can announce that we go further. The personal tax-free allowance will rise to £10,800 next year – and then to £11,000 the year after. That’s £11,000 you can earn before paying any income tax at all.

"It means the typical working taxpayer will be over £900 a year better off.

"It’s a tax cut for 27 million people and means we’ve taken almost 4 million of the lowest paid out of income tax altogether.

"For the first time in 7 years, the threshold at which people pay the higher tax rate will rise not just with inflation – but above inflation.

"It will rise from £42,385 this year to £43,300 by 2017-18."

Osborne has also abolished Class 2 national insurance contributions for the self-employed.