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Budget: Personal allowance increased to £10,000 from April 2014

printer Mail

George Osborne announced that the government will increase the personal allowance to £10,000 one year ahead of schedule.

The ‘historic achievement’ would mean ‘£700 less in tax for working families than when this government came to office’, the chancellor said as he delivered his Budget.  The commitment given in May 2010 was to reach that level by the end of the parliament.

The allowance will be increased to £9,440 next month and £10,000 in April 2014. Almost three million low-income individuals under 65 will have been lifted out of income tax altogether.

The Treasury said: ‘The national minimum wage for full-time employees is £12,070, so [people earning that amount, based on a 37.5 hour week] will have benefited from a substantial cut in the amount of income tax they pay once the personal allowance reaches £10,000 in 2014/15.’

The chancellor confirmed that a new ‘tax-free childcare’ scheme will meet 20% of childcare costs up to £1,200 per child per year, replacing the existing system of employer supported childcare from autumn 2015. Details were announced yesterday.