The personal allowance for under-65s took a step closer towards the £10,000 target of the Liberal Democrats in today’s Budget.
Chancellor George Osborne had previously announced that the allowance would increase this April to £7,475, an increase of £1,000.
In today’s budget it was revealed the personal allowance would rise by an extra £630 to £8,105 in 2012/13.
Mr Osborne said in his speech:
“The coalition agreement commits this government to real increases in the personal allowance each and every year and sets this country the goal that no one earning less than £10,000 should be caught in the income tax net”
“This Budget today takes another step towards that valuable goal.”
The Chancellor said that the latest increase means over 1.1 million people will be taken out of income tax altogether, giving them an extra £326 in cash.