Summer Budget 2015: Changes to personal allowances and basic rate limit

Finance Act 2015 set the personal allowance to £10,800 for 2016/17, and removed the additional age related personal allowance for those born before 6 April 1938 so that everyone, regardless of their date of birth, would be entitled to the same allowance. The basic rate limit was set at £31,900 for 2016/17 and £32,300 for 2017/18.

The personal allowance will be £11,000 for 2016/17 and £11,200 for 2017/18. The basic rate limits will also be increased and as a result, the threshold above which an individual pays tax at the higher rate will increase to £32,000 for 2016/17 and to £32,400 in 2017/18.

The upper earnings limits for NIC purposes will remain aligned to the higher rate threshold.

This measure is part of the government’s objective to raise the personal allowance to £12,500 and the higher rate threshold to £37,500 by the end of this parliament.