Budget 2016 – Increase in Personal Allowance and Basic Rate band

In the Summer Budget 2015 the personal allowance for an individual for 2017/18 was set at £11,200 and the basic rate tax limit at £32,400.

In line with the government’s objective to raise the personal allowance and the higher rate threshold to £12,500 and £50,000 respectively by the end of this parliament, it was announced that the personal allowance for individuals will be increased to £11,500 with the basic rate band being increased to £33,500, with effect from 6 April 2017.

The measure will reduce the income tax burden for 28.9 million income taxpayers in 2017/18, encouraging more individuals to enter the workplace and also increasing disposable household incomes.