Budget 2017: personal allowance to rise to £11,500
Chancellor Philip Hammond has reaffirmed the government's plans to increase to personal tax allowance to £12,500 by the end of this Parliament in his Budget speech.
As previously announced, workers will see their personal tax allowance rise to £11,500 from 6 April 2017 and the allowance will reach £12,500 by the 2019/20 tax year. Earnings below this amount are not liable to pay any income tax.
Higher rate tax payers will receive a further tax break as the 40 per cent tax threshold is increased once more. From April 2017 only those with an income of more than £45,000 will be subject to a 40 per cent rate of income tax.
At present the threshold starts at £43,000 and the Conservatives have pledged to increase this to £50,000 by end of the current Parliament.
SELF-EMPLOYED TAX CHANGES
The minimum wage will rise from £7.20 to £7.50 from April 2017, Mr Hammond confirmed. Additionally, the amount that can be invested in an individual savings account (Isa) will also rise to £20,000 next month.
There were significant changes to the way self-employed people are taxed.
From April 2018 class 4 national insurance contributions (NICs) will rise from 9 per cent to 10 per cent and a further 1 per cent increase will be implemented in April 2019. Class 2 contributions will also be axed, as previously announced.
Elsewhere, the government announced plans to introduce free transport for pupils who attend grammar schools and receive free school meals.
Free childcare will be extended to working families with children under 12 in England, providing up to £2,000 a year to help with childcare costs. From September 2017, this free childcare offer will double, from 15 to 30 hours a week for families with three and four year olds.
This article was written for our sister website Moneywise.