Personal allowance and higher rate threshold to rise
George Osborne has confirmed that the government will raise the tax-free personal allowance to £11,500 and the higher rate tax threshold from £42,385 to £45,000.
Speaking during the Budget, Osborne said that the personal allowance increase would see 31 million people benefit from a tax cut.
He said:
"It means a typical basic rate taxpayer will be paying over £1,000 less income tax than five years ago. And it means another 1.3 million of the lowest paid taken out of tax altogether."
Discussing changes to the higher rate tax threshold, Osborne said it would "lift over half a million people who should never have been paying the higher rate out of that higher tax band altogether".
Concluding, he claimed that the move is "the biggest above inflation cash increase since Nigel Lawson introduced the 40p rate almost thirty years ago".
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