Budget – Personal tax allowances

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From April 2011, the under-65 personal allowance increases from £6,475 to £7,475 as the first stage of the Government’s plans to increase the allowance to £10,000 before the end of the current Parliament.

From April 2012, the personal allowance will increase by a further £630 to £8,105.  However, as in April 2011, the basic rate limit will be reduced by the same amount, down to £34,370.  The higher rate threshold will therefore remain unchanged for 2012/13 at £42,475, with the result that higher-paid taxpayers will, for a second year, not benefit from the increase in the personal allowance.

Increases in further years will be at least equivalent to the movement in the Retail Price Index (RPI), until the £10,000 target is reached.

Although in principle the Consumer Prices Index (CPI) will be used to review direct taxes annually from 2012, the RPI will continue to be used for the other tax allowances for the duration of the current Parliament.  (See Budget – Consumer Price Index)

Further information:

TIIN: Income Tax Personal Allowances for Those Aged Under 65 for 2012-13

Tags: #budget2011, 2011 budget, budget, personal tax allowances, Recent Payroll News, taxation

This entry was posted on Thursday, March 24th, 2011 at 19:02 and is filed under Budget. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.