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Chancellor loosens income tax burden on workers

The tax-free personal allowance and threshold for higher rate tax will both rise this year, reducing income tax for half a million people.

Chancellor loosens income tax burden on workers

The tax-free personal allowance and threshold for higher rate will both rise this year after the chancellor claimed he was continuing to reduce the tax burden on working people.

Currently individuals can earn £10,600 without paying tax, a personal allowance that is set to rise to £11,000 next month. Today George Osborne went further, announcing the zero rate band would rise to £11,500 from April 2017 as part of a goal of reaching £12,500 by the end of this Parliament.

Today's measure should ensure that no one working 30 hours a week on the national minimum wage will pay income tax in 2017/18 and, according to Treasury figures, means 1.3 million have been taken out of the income tax net in the past year.  

Osborne told MPs this was 'social justice delivered by Conservative means'.

The chancellor also again lifted the level at which people start paying higher rate income tax.

The higher rate threshold was due to rise to £43,000 from £42,385 next month following an announcement in last year's Summer Budget. Today Osborne said the threshold would increase to £45,000 next year, a £2,000 advance that he said was the biggest above inflation cash increase since the threshold was introduced by Margaret Thatcher's chancellor, Lord Lawson, in 1989.

'That’s a tax cut of £400 a year its going to lift over half a million people who should never have been paying the higher rate out of that higher rate band altogether,' Osborne said.

2 comments so far. Why not have your say?


Mar 16, 2016 at 16:09

There may be an income tax cut for higher rate taxpayers, but Osborne failed to mention that the NI Upper Earnings Limit will also be increased as it is linked to the higher rate tax threshold, and we won't know how big the increase will be until the Autumn Statement.

Every £100 increase in the limit will claw back £10 of the income tax reduction, and based on the way it's moved over the past few years, it looks as though an increase of well over £1,000 may be on the cards.

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john west 10

Mar 17, 2016 at 01:36

As usual Nothing for the frozen pensioners, but are we surprised/ We are disgusted yet again. Sort it out.

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