Read more updates on the Autumn Budget 2018 in Tuesday’s Daily News email
Autumn Budget 2018: The government has today (29 October 2018) announced a commitment to increase the tax-free personal allowance to £12,500 and the higher-rate threshold to £50,000 in April 2019.
The current personal allowance stands at £11,850, and the higher-rate threshold is £46,351. The announcement reveals a pledge by the government to meet its manifesto commitment one year earlier than originally planned.
Philip Hammond MP, Chancellor of the Exchequer, stated: “As well as making work pay, we want working people to keep more of the money they earn,” said Hammond.
“I didn’t come into politics to put taxes up, and the improvement we have delivered in the public finances means that based on the [Office for Budget Responsibility’s] forecast published today, I do not need to do so.”
Both thresholds will remain at the same level through 2020 and 2021, and then increase in line with the Consumer Price Index.
The government states that this change means that a typical basic rate taxpayer will pay £130 less tax than in 2018-19, and £1,205 less than in 2010-11, according to analysis by HM Treasury.
This will reportedly increase the number of taxpayers taken out of income tax since 2015-16 to 1.74 million, and will result in there being nearly one million fewer higher rate taxpayers than there were in 2015-16. Overall, according to HMRC analysis of personal income statistics, 32 million individuals can hope to see their tax bills reduced in 2019-20.
“This is the hard work of the British people paying off in cash in their pocket,” concluded Hammond. “Now we must pull together to build the bright, prosperous future that is within Britain’s grasp, if we choose to seize it.”
Robert Colvile, Director of the Centre for Policy Studies, said: “The overwhelming majority of the extra spending proposed will go towards meeting the pledge to increase health spending. That the Chancellor has managed to do this without increasing personal taxes is impressive, although it comes at the price of ensuring that we will remain in deficit rather than surplus – admittedly a far, far more manageable one than under Labour’s plans for the economy.”
Lynda Whitney, partner at Aon, added: “Net pay continues to be an issue and the increase in personal allowance makes it a bit worse.”