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Summer Budget: Osborne gives Britain a pay rise

A new living wage and increases in income tax allowance put more money in peoples' pockets.

 
Summer Budget: Osborne gives Britain a pay rise

The chancellor said he would put more money in working peoples’ pockets by introducing a ‘living wage’ and increasing the income tax thresholds.

From next April everyone aged over 25 will be entitled to a ‘national living wage’ of £7.20 an hour, which will increase to £9 an hour by 2020. The minimum wage is currently £6.50 an hour.

This means a pay rise for 2.5 million people and full-time workers on the minimum will take home an extra £5,000, or a third of their wages, over the life of the parliament.

'Britain deserves a pay rise and Britain is getting a pay rise,' said George Osborne in his speech. 'The new national living wage will be compulsory. Working people aged 25 and over will receive it. It will start next April at the rate of £7.20. The Low Pay Commission will recommend future rises that achieve the government's objective of reaching 60% of median earnings by 2020.'

On top of this, the personal allowance will also be increased to £11,000 next year, from £10,500, meaning income tax is not paid on the first £11,000 of income earned.

‘That’s £11,000 you can earn before paying any income tax all, boosting wages by over £900 in total – and a down payment on our goal of reaching [a personal allowance of] £12,500,’ said Osborne.

‘We will now legislate so that after that the personal allowance always rises in line with the minimum wage, and we never ask the lowest paid out our society to pay income tax.’

Those paying higher rate income tax of 40% were also offered a small giveaway as the rate at which 40% income tax is paid increased from £42,385 to £43,000, which Osborne said ‘marks a strong start to our commitment to raise the threshold to £50,000’.

‘A personal allowance of £11,000. A higher rate threshold of £43,000. 29 million people paying less tax. A down payment for a country on the up,’ he said.

4 comments so far. Why not have your say?

Law Man

Jul 08, 2015 at 18:51

Good; but now will he raise the lower earnings threshold for NIC up to the Personal Allowance level. It is absurd that low paid workers have to pay NIC and then receive back tax credits.

£7.20 per hour for a 37.5 hour working week over a year is £14,040p.a.

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touchthe sky

Jul 08, 2015 at 22:02

Great news, this why they were voted in. !!!!!!' M

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Jonas Cord

Jul 09, 2015 at 10:59

Is the current PA not £10,600 ?

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Graham Barlow

Jul 09, 2015 at 11:24

Like the free TV license for pensioners Osborne merely passed the cost to the BBC from the Treasury, he has passed the cost of Tax credits over to the employer. To give our drivers with 3 kids a rise we used to have to give them at least £5ooo a year increase to make any difference with Tax credits. There is now a 50000 shortage of drivers in the UK due to the cost of driving and aggro that goes with the job.

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