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Personal tax threshold hits £45K
Higher rate personal tax threshold hits £45K
From 6 April 2017, the personal allowance is increasing to £11,500 and the higher rate threshold goes to £45,000, with higher rate taxpayers looking to take home an extra £400 each year.
The increase to £11.5k in the tax-free threshold is estimated take 1.3 million of the lowest paid out of income tax altogether and cut income tax for 31 million people, compared to 2015-16. By raising the personal allowance it means that the amount someone can earn tax free in 2017-18 will be over 75% higher than it was in 2010.
The personal allowance is set to rise by £500 to £11,500 in its seventh year of continued growth and the higher rate threshold will increase by £2,000 to £45,000.
Over the previous seven years the personal allowance has grown by £5,025 from £6,475 in 2010-11 to £11,500 in 2017-18.
Increasing the personal allowance will cost government £1.7bn in 2017-18 and the higher rate threshold will cost £1.6bn over the next three years.
The plans to increase the thresholds was announced as part of Chancellor Philip Hammond’s spring Budget to ensure a fair and sustainable tax system.
Source CCH Daily
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