Personal tax thresholds to be raised a year early

Personal tax allowances will be raised a year early, the Chancellor announced in today’s budget.

Philip Hammond said that from April next year, the personal allowance will be £12,500 and £50,000 for the higher rate threshold.

Currently they stand at £11,850 and £46,350 respectively and they were due to be highered from April 2020.

As Hammond announced that the “era of austerity coming to an end” and that the budget was to produce an “economy not for the few, not even for the many; an economy for everyone, he left the announcement of tax allowances being raised to the very end of budget delivery.

Hammond said that this would put £130 a year in the pockets of average taxpayers. Hammond told the Commons: “My idea of ending austerity does not involve increasing people’s tax bills.”

Robert Simpson, Managing Director at Garbutt + Elliott, said: “In a budget of few surprises for individuals, Spreadsheet Phil’s bombshell to the tax paying public was to not only keep manifesto pledges to increase the personal allowance for Income tax to £12,500 and to increase the High Rate Tax threshold to £50,000, he has brought these forwards to April 2019.  This will save Basic Rate tax payers £130 per year and individuals earning £50 upwards around £1k per year.

“At first glance, a reduction of pension tax reliefs for high earners hasn’t appeared, keeping contribution allowances at £40k per year and the Lifetime Allowance continuing to see an inflationary increase in April 2019.  The annual ISA allowance of £20k has been frozen.

“The always popular freezing of duty on most alcoholic tipples drew the usual cheers from MPs. “