Budget 2011 – Income Tax Rates and Allowances
The Chancellor announced that from April 2012 the basic personal allowance for those aged under 65 will rise to £8,105, an increase of £630. This increase is part of the Government’s commitment to increase the personal tax allowance to £10,000 by the end of the present parliament.
Thisfurther change follows the Chancellor’s announcement in last year’s emergency Budget of a £1,000 increase in the basic under 65 personal allowance to £7,475 from April 2011.
The further increase in 2012/13 will not benefit higher rate tax payers as the basic rate limit will be reduced by the same amount, £630, to £34,370. Due to this reduction in the basic rate band the higher rate threshold is not affected by this announcement.
For 2012/13 all other income tax personal allowances and limits that are subject to indexation will be increased in line with the Retail Prices Index (RPI).
Taxpayers’ personal allowances are withdrawn for those with income of more than £100,000 at a rate of £1 for every £2 above £100,000. From April 2012 individuals earning more than £116,210 will receive no personal allowance. (The equivalent figure for 2011/12 is £114,950).