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Budget 2015 - Tax free personal allowance continues to rise

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18 March 2015

As already announced, the tax free allowance for an individual will rise from £10,000 to £10,600 for 2015/16, and further increases were also promised.  For 2016/17 the personal allowance will rise to £10,800 and for 2017/18 it will be £11,000. If the government is re-elected they have made a commitment to raise the personal allowance to £12,500 and the threshold before paying higher rate tax to £50,000.

Alongside this, the income tax basic rate band will be amended.   It was already known that the basic rate band would reduce by £80 to £31,785 for 2015/16 but the Chancellor has announced that it will rise for the following two years to £31,900 for 2016/17 and £32,300 for 2017/18. 

The increases in both the personal allowance and the basic rate band will mean that all taxpayers will pay less tax overall, regardless of their income.  The measures will cost the government about £1 billion in 2015/16 and £1.5 billion the following year.