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 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.
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% #Budget2017https://t.co/wGjRfcDjJb
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
Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.