Year-end & cash flow

Autumn Budget 2017: Tax-free personal allowance extended to 11, 850

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 onbasic incomes.

Hammond claimedthis 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.

With inflation at 3%, in real terms the personal allowance (the bit you earn which doesn’t get taxed) will increase by an imperceptible 0.04% #Budget2017 https://t.co/wGjRfcDjJb

? Sam McBride (@SJAMcBride) November 22, 2017