The government has used the Autumn Budget to increase the personal allowance to £11,850 and the higher rate threshold to £46,350.
Chancellor Philip Hammond (pictured) said the government was increasing the limit in line with plans announced by former chancellor George Osborne.
‘When we came into office the personal allowance was £6,475 per year from April will increase the personal allowance to £11,850 per year and the higher rate threshold to £46,350,’ he said.
Currently workers have a personal allowance of tax-free income up to £11,500. A 20% basic rate of income tax applies to earnings between £11,501 and £45,000. Between £45,001 and £150,000 income tax sits at 40% and over £150,000.
The government has previously committed to raising the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of the Parliament which at that time was set to be 2020.
Since 2015 the personal allowance has been linked to the national minimum wage to ensure workers on the national minimum wage working up to 30 hours per week do not pay income tax.
After 2020 the personal allowance will rise in line with the consumer price index measure of inflation instead.