Low paid workers, freelancers and micro business owners will have a greater tax-free income in 2018, after the chancellor extended the lower personal allowance £11,850.
In his Autumn Budget speech, chancellor Philip Hammond confirmed an increase of the personal allowance from £11,500 to £11,850, giving a tax-free boost of £350 to those on basic incomes.
Hammond claimed this will mean a £1,075 reduction in the amount of tax paid by a typical taxpayer in the 2018/19 tax year. The extension applies to all tax payers earning below £100,000.
The government has previously pledged to raise the tax-free personal allowance to £12,500 by the 2020/21 tax year.
However, with the UK’s inflation rate reaching three per cent, the increase to the tax-free personal allowance means a real terms increase of 0.04 per cent.
— Sam McBride (@SJAMcBride) November 22, 2017
Hammond also confirmed the extension of the higher rate. As of 2018, the level at which earners enter the 40 per cent tax band will rise from £45,000 to £46,350.
Take a look at our Autumn Budget coverage
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