PERSONAL income tax allowances are to rise by more than planned to reach £9,440 from April 2013, it was announced yesterday.
The move is £235 higher than anticipated and means an annual increase of £1,335 in the threshold at which people start paying tax.
The Treasury predicts the move will beneﬁt 24.4m people and take an additional 250,000 out of income tax next year.
Under the original proposals the allowance was set to rise from £8,105 this year to £9,205 for 2013-14 but yesterday Chancellor George Osborne surprised many by increasing the level to £9,440.
“This is a direct boost to the incomes of people working hard to provide for their families. We are within touching distance of the £10,000 personal allowance,” Osborne said.
The Liberal Democrat target of raising the allowance to £10,000 should be hit by 2015-16.
As a result of the changes to the allowance made since the start of this parliament, 2.2m workers will have been taken out of income tax.
The rise will cost £1bn in 2013-14 before declining each year as wages rise, pushing more earners back into paying tax.
“No one will pay a penny more in income tax,” Osborne told the commons.